Borrowing Costs and the Role of Multilateral Development Banks: Evidence from Cross-Border Syndicated Bank Lending
45 Pages Posted: 14 Jan 2019
Date Written: December 2018
Cross-border bank lending is a growing source of external finance in developing countries and could play a key role for infrastructure financing. This paper looks at the role of multilateral development banks (MDBs) on the terms of syndicated loan deals, focusing on loan pricing. The results show that MDBs' participation is associated with higher borrowing costs and longer maturities---signaling a greater willingness to finance high risk projects which may not be financed by the private sector---but it is also associated with lower spreads for riskier borrowers. Overall, our findings suggest that MDBs could crowd in private investment in developing countries through risk mitigation.
Keywords: Microfinance, Africa, inancial inclusion, loan expansion program, credit reference bureau, Financial inclusion, Microeconomic Analyses of Economic Development
JEL Classification: G21, O12, O55
Suggested Citation: Suggested Citation