IDEAS home Printed from https://ideas.repec.org/p/zbw/tuedps/310.html
   My bibliography  Save this paper

IMF's assistance: Devil's kiss or guardian angel?

Author

Listed:
  • Brandes, Julia
  • Schüle, Tobias

Abstract

This paper contributes to the debate on the efficacy of IMF's catalytic finance in preventing financial crises. Extending Morris and Shin (2006), we consider that the IMF's intervention policy usually exerts a signaling effect on private creditors and that several interventions in sequence may be necessary to avert an impending crisis. Absent of the IMF's signaling ability, our results state that repeated intervention is required to bail out a country, where by additional assistance may induce moral hazard on the debtor side. Contrarily, if the IMF exerts a strong signaling effect, one single intervention suffices to avoid liquidity crises.

Suggested Citation

  • Brandes, Julia & Schüle, Tobias, 2007. "IMF's assistance: Devil's kiss or guardian angel?," Tübinger Diskussionsbeiträge 310, University of Tübingen, School of Business and Economics.
  • Handle: RePEc:zbw:tuedps:310
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/40321/1/558771386.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Schnabl, Gunther, 2003. "China: a stabilizing or deflationary influence in East Asia?The problem of conflicted virtue," Tübinger Diskussionsbeiträge 263, University of Tübingen, School of Business and Economics.
    2. Ronald McKinnon & Gunther Schnabl, 2004. "The East Asian Dollar Standard, Fear of Floating, and Original Sin," Review of Development Economics, Wiley Blackwell, vol. 8(3), pages 331-360, August.
    3. Gunther Schnabl, 2004. "De jure versus de facto Exchange Rate Stabilization in Central and Eastern Europe," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 59(02), pages 171-190, June.
    4. Felbermayr, Gabriel J. & Toubal, Farid, 2010. "Cultural proximity and trade," European Economic Review, Elsevier, vol. 54(2), pages 279-293, February.
    5. Grupp, Hariolf & Stadler, Manfred, 2004. "Technological Progress and Market Growth : An Empirical Study Based on the Quality-Ladder Approach," Tübinger Diskussionsbeiträge 281, University of Tübingen, School of Business and Economics.
    6. Licht, Georg & Stadler, Manfred, 2003. "Auswirkungen öffentlicher Forschungsförderung auf die private F&E-Tätigkeit: Eine mikroökonomische Evaluation," Tübinger Diskussionsbeiträge 256, University of Tübingen, School of Business and Economics.
    7. Kleinert, Jörn & Toubal, Farid, 2005. "A Structural Model of Export versus Affiliates Production," Tübinger Diskussionsbeiträge 288, University of Tübingen, School of Business and Economics.
    8. Gunther Schnabl & Paul De Grauwe, 2004. "Nominal versus Real Convergence with Respect to EMU Accession - EMU Entry Scenarios for the New Member States," International Finance 0403008, EconWPA, revised 16 Feb 2005.
    9. J.Baten & J.Wallusch, 2005. "Market Integration and Disintegration of Poland and Germany in the 18th Century," Economies et Sociétés (Serie 'Histoire Economique Quantitative'), Association Française de Cliométrie (AFC), issue 33, pages 1233-1264, July.
    10. Lachmund, Andreas & Kiesewetter, Dirk, 2004. "Wirkungen einer Abgeltungssteuer auf Investitionsentscheidungen und Kapitalstruktur von Unternehmen," Tübinger Diskussionsbeiträge 278, University of Tübingen, School of Business and Economics.
    11. repec:ebl:ecbull:v:4:y:2005:i:12:p:1-7 is not listed on IDEAS
    12. Güth, Werner & Stadler, Manfred, 2004. "Path Dependence Without Denying Deliberation : An Exercise Model Connecting Rationality and Evolution," Tübinger Diskussionsbeiträge 282, University of Tübingen, School of Business and Economics.
    13. Baur, Dirk & Schulze, Niels, 2005. "Coexceedances in financial markets--a quantile regression analysis of contagion," Emerging Markets Review, Elsevier, vol. 6(1), pages 21-43, April.
    14. Stadler, Manfred, 2006. "Education and innovation as twin-engines of growth," Tübinger Diskussionsbeiträge 302, University of Tübingen, School of Business and Economics.
    15. Schüle, Tobias, 2006. "Creditor coordination with social learning and endogenous timing of credit decisions," Tübinger Diskussionsbeiträge 307, University of Tübingen, School of Business and Economics.
    16. Jung, Robert & Kukuk, Martin & Liesenfeld, Roman, 2005. "Time Series of Count Data: Modelling and Estimation," Economics Working Papers 2005-08, Christian-Albrechts-University of Kiel, Department of Economics.
    17. Schüle, Tobias, 2006. "Forbearance lending and soft budget constraints in a model of multiple heterogeneous bank financing," Tübinger Diskussionsbeiträge 303, University of Tübingen, School of Business and Economics.
    18. Zaby, Alexandra K., 2005. "Losing the lead: Patents and the disclosure requirement," Tübinger Diskussionsbeiträge 296, University of Tübingen, School of Business and Economics.
    19. Schnabl, Gunther, 2005. "Der Festkurs als merkantilistische Handelspolitik : Chinas Währungs- und Geldpolitik im Umfeld globaler Ungleichgewichte," Tübinger Diskussionsbeiträge 291, University of Tübingen, School of Business and Economics.
    20. Stadler, Manfred, 2004. "Bildung, Innovationsdynamik und Produktivitätswachstum," Tübinger Diskussionsbeiträge 280, University of Tübingen, School of Business and Economics.
    21. Bayer, Stefan, 2003. "Possibilities and limitations of economically valuating ecological damages," Tübinger Diskussionsbeiträge 254, University of Tübingen, School of Business and Economics.
    22. Godart, Olivier N. & Toubal, Farid, 2005. "Cross The Border and Close The Gap? : How Do Migrants Enhance Trade," Tübinger Diskussionsbeiträge 289, University of Tübingen, School of Business and Economics.
    23. Töpfer, Klaus, 2006. "Offene Fragen und wissenschaftliche Herausforderungen der Entwicklungsund Umweltpolitik," Tübinger Diskussionsbeiträge 301, University of Tübingen, School of Business and Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    catalytic finance; debtor moral hazard; global games;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:tuedps:310. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/wftuede.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.