Thread by @a_presbitero

New paper with @DZerfu & @migsarmiento17 on how multilateral development banks can affect loan terms in the syndicated loan market, forthcoming in the Journal of International Money and Finance. A short summary of the findings:

1. #MDBs’ participation is associated with higher
borrowing costs and longer maturities—signaling a greater willingness by MDBs to finance risky projects which may not be financed by the private sector

2. #MDBs are more likely to lend to borrowers located in countries with high credit and financial risk

3. While within high-risk countries there is limited evidence that #MDBs lend to riskier borrowers, in low-risk countries the average spread associated with MDBs’ participation is quite large, signaling that MDBs are more likely to lend to risky firms

Our results indicate that #MDBs—thanks to better information and monitoring capacity—could play an important role for the #2030Agenda, by contributing to provide long-term finance to risky projects, which may not be otherwise financed by the private sector

This evidence is complementary to a companion paper on #mobilization effects by #MDBs (with @giulialotti3 @almaffioli & @rodstucchi, forthcoming in the WBER), where we show that for each dollar put by MDBs, the private sector lends 7$ on the next 3 years

Both papers are funded by @DFID_UK and available here (ungated):
sites.google.com/site/presbiter…

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