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Does IMF Financing Result in Moral Hazard?
Author:
Mr. Steven T Phillips
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and
Mr. Timothy D. Lane
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Series:
IMF Working Papers
Volume/Issue:
Volume 2000: Issue 168
Language:
English
Publication Date:
01 Oct 2000
DOI:
https://doi.org/10.5089/9781451858259.001
ISBN:
9781451858259
ISSN:
1018-5941
Pages:
39
Keywords:
WP; IMF financing; financing package; IMF funds; IMF lending; IMF action; IMF response; IMF staff estimate; IMF; moral hazard; disbursement policy; liquidity position; IMF governor; fund financial support; IMF disbursement; Fund program; Yield curve; Emerging and frontier financial markets; Systemically important financial institutions; Asia and Pacific
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The view that the IMF’s financial support gives rise to moral hazard has become increasingly prominent in policy discussions, particularly following the 1995 Mexican crisis. This paper seeks to clarify a number of conceptual issues and bring some basic empirical evidence to bear on this hypothesis. While some element of moral hazard is a logical consequence of the IMF’s financial support, such moral hazard is difficult to detect in market reactions to various IMF policy announcements and there is no evidence that such moral hazard has recently been on the rise.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund