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Stigma? What stigma? A contribution to the debate on financial market effects of IMF lending

Author

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  • Scheubel, Beatrice
  • Tafuro, Andrea
  • Vonessen, Benjamin

Abstract

In the policy debate on the effectiveness of the Global Financial Safety Net, concerns have been raised that expectations of adverse effects of IMF programmes may deter countries from asking for an IMF programme when they need one, a form of ‘IMF stigma’. We explore the existence of IMF financial market stigma using monthly data by estimating how and to which extent adverse market reactions to a programme materialise and how past experience with adverse market reactions affects subsequent IMF programme participation. Our results, derived with event history techniques and propensity score matching, indicate no role for ‘IMF stigma’ stemming from the fear of adverse market movements. Instead, we find evidence of ‘IMF recidivism’ driven by adverse selection and IMF conditionality. JEL Classification: E02, F32, F33, F34

Suggested Citation

  • Scheubel, Beatrice & Tafuro, Andrea & Vonessen, Benjamin, 2018. "Stigma? What stigma? A contribution to the debate on financial market effects of IMF lending," Working Paper Series 2198, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20182198
    Note: 2025627
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    Cited by:

    1. Claudia Maurini, 2019. "IMF programs and stigma in Emerging Market Economies," Temi di discussione (Economic working papers) 1247, Bank of Italy, Economic Research and International Relations Area.
    2. Andone, Irina & Scheubel, Beatrice, 2019. "Once bitten: new evidence on the link between IMF conditionality and IMF stigma," Working Paper Series 2262, European Central Bank.

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    More about this item

    Keywords

    Asian crisis; capital flows; Global Financial Safety Net; IMF conditionality; IMF recidivism; treasury bill rates;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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