Mobilization Effects of Multilateral Development Banks

Abstract

We use loan-level data on syndicated lending to a large sample of developing countries between 1993and 2017 to estimate the mobilization effects of multilateral development banks (MDBs), controllingfor a large set of fixed effects. We find evidence of positive and significant direct and indirectmobilization effects of multilateral lending on the number of deals and on the total size of bankinflows. The number of lending banks and the average maturity of syndicated loans also increase afterMDB lending. These effects are present not only on impact, but they last up to three years and are notoffset by a decline in bond financing. There is no evidence of anticipation effects and the results arenot driven by confounding factors, such as the presence of large global banks, Chinese lending andaid flows. Finally, the economic effects are sizable, suggesting that MBDs can play a vital role tomobilize private sector financing to achieve the goals of the 2030 Development Agenda.

Keywords: Official development assistance, International bond markets, Sovereign credit ratings, International financial markets, Poverty reduction and development, Multilateral Development Banks, Private Capital Flows, Mobilization Effects, CatalyticFinance, Syndicated loans, syndicated loan, MDB, outcome variable, mobilization, bond issuance

JEL Classification: F21, F34, G15, H81, E01, L31, F16, E52, E22