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IMF Lending in an Interconnected World
Author: Jean-Guillaume Poulain and Julien Reynaud
Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 155
Language:
English
Publication Date:
10 Jul 2017
DOI:
https://doi.org/10.5089/9781484305867.001
ISBN:
9781484305867
ISSN:
1018-5941
Pages:
30
Keywords:
WP; IMF lending; financial crisis; GDP; IMF arrangement; lending; interconnectedness; global financial cycle; spillovers; IMF agreement; fund support; GDP variation; IMF lending cycle; Financial contagion; Current account deficits; Oil prices; Global
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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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We analyze the determinants of IMF lending since the early nineties, a period during which the roles of financial cycles and interconnectedness as amplifiers and transmitters of economic crises have gained prominence. First, we show that the global financial cycle is an important driver of IMF lending cycles. Second, using a panel of 91 advanced, emerging, and frontier economies over 1992-2014, we show that global factors and interconnectedness, as proxied by a countries’ potential exposure to economic spillovers from trade partners, together with more traditional idiosyncratic factors, have a significant impact on the probability that a member country obtains financial assistance from the IMF. Our results are robust to various robustness checks. The approach presented in this paper can be used to assess future demand for IMF financial assistance.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund