Determinants of Development Financing Flows from Brazil, Russia, India, and China to Low-Income Countries

25 Pages Posted: 8 Nov 2011

See all articles by Nkunde Mwase

Nkunde Mwase

International Monetary Fund (IMF)

Date Written: November 2011

Abstract

BRICs development financing flows have increased significantly and are expected to become more prominent in the post-crisis era. We investigate the potential implications on the country-allocation of loan commitments and the degree of concessionality using a panel vector autoregression model and single equation dynamic panel estimation. We find that BRICs lend more to LICs with weaker institutions. Land-locked, resource-scarce LICs receive significantly less financing than other resource-rich LICs. The degree of concessionality is negatively correlated with the amount of loans and positively correlated with better institutional indicators suggesting that the higher the risks, the higher the required returns that BRICs expect.

Keywords: Brazil, China, Concessional aid, Development assistance, Development financing, Economic models, India, Loans, Low-income developing countries, Russian Federation

Suggested Citation

Mwase, Nkunde, Determinants of Development Financing Flows from Brazil, Russia, India, and China to Low-Income Countries (November 2011). IMF Working Paper No. 11/255, Available at SSRN: https://ssrn.com/abstract=1956402

Nkunde Mwase (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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