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Does the global fireman inadvertently add fuel to the fire? New evidence from institutional investors' response to IMF program announcements

Listed author(s):
  • Wei, Shang-Jin
  • Zhang, Zhiwei
  • Du, Qingyuan

Fighting global financial crises is a primary charge of the IMF. Yet it has often been criticized to have hindered rather than helped the recovery of many countries in a crisis by demanding policy changes that may not be appropriate for them in that particular moment. Such actions would tend to damage investor confidence. Using monthly data on investment in 94 developing countries by 168 institutional investors during 1996-2005, this paper re-assesses this important question. We find that the IMF has typically restored rather than reduced investor confidence.

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File URL: http://www.sciencedirect.com/science/article/pii/S0261-5606(10)00008-2
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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 29 (2010)
Issue (Month): 4 (June)
Pages: 728-741

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Handle: RePEc:eee:jimfin:v:29:y:2010:i:4:p:728-741
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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  7. Dong Lee & Bong-Chan Kho & Rene M. Stulz, 2000. "U.S. Banks, Crises, and Bailouts: From Mexico to LTCM," American Economic Review, American Economic Association, vol. 90(2), pages 28-31, May.
  8. Brealey, R. A. & Kaplanis, E., 2004. "The impact of IMF programs on asset values," Journal of International Money and Finance, Elsevier, vol. 23(2), pages 253-270, March.
  9. Ashoka Mody & Diego Saravia, 2006. "Catalysing Private Capital Flows: Do IMF Programmes Work as Commitment Devices?," Economic Journal, Royal Economic Society, vol. 116(513), pages 843-867, 07.
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  11. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2006. "Governance matters V: aggregate and individual governance indicators for 1996 - 2005," Policy Research Working Paper Series 4012, The World Bank.
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