Borrowing Costs and the Role of Multilateral Development Banks: Evidence from Cross-Border Syndicated Bank Lending

45 Pages Posted: 14 Jan 2019

See all articles by Daniel Gurara

Daniel Gurara

International Monetary Fund (IMF)

Andrea Presbitero

International Monetary Fund (IMF)

Miguel Sarmiento

Tilburg University, CentER, European Banking Center (EBC); Central Bank of Colombia

Date Written: December 2018

Abstract

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

Gurara, Daniel and Presbitero, Andrea and Sarmiento, Miguel, Borrowing Costs and the Role of Multilateral Development Banks: Evidence from Cross-Border Syndicated Bank Lending (December 2018). IMF Working Paper No. 18/263. Available at SSRN: https://ssrn.com/abstract=3314595

Daniel Gurara (Contact Author)

International Monetary Fund (IMF) ( email )

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

Andrea Presbitero

International Monetary Fund (IMF) ( email )

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

Miguel Sarmiento

Tilburg University, CentER, European Banking Center (EBC) ( email )

Tilburg
Netherlands

HOME PAGE: http://https://scholar.google.com/citations?user=n2FzTYAAAAAJ&hl=es&oi=ao

Central Bank of Colombia ( email )

Carrera 7 #14-78
3551 de Bogotá
Colombia

HOME PAGE: http://www.banrep.gov.co/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
13
Abstract Views
99
PlumX Metrics