Economic Determinants of Fund Financial Arrangements

48 Pages Posted: 15 Feb 2006

See all articles by Malcolm Knight

Malcolm Knight

World Bank

Julio A. Santaella

Instituto Tecnológico Autónomo de México (ITAM)

Date Written: March 1994

Abstract

This paper analyses empirically the economic factors that lead to approval of Fund financial arrangements. We account for both the economic variables that induce a country to seek an arrangement with the Fund ("demand-side" factors) and the macroeconomic policy commitments that the Fund considers when deciding whether to approve it ("supply-side" factors). Using a pooled sample of annual observations for 91 developing countries over 1973-1991, we obtain maximum likelihood estimates of bivariate and univariate probit equations to determine the probability of approval of a financial arrangement for a given country in a given year. A number of our chosen demand-side and supply-side variables are statistically significant determinants of the approval of a Fund arrangement, and the overall explanatory power of the equations is high.

JEL Classification: F32, F33, F34

Suggested Citation

Knight, Malcolm and Santaella, Julio A., Economic Determinants of Fund Financial Arrangements (March 1994). IMF Working Paper No. 94/36, Available at SSRN: https://ssrn.com/abstract=883487

Malcolm Knight (Contact Author)

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

Julio A. Santaella

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Rio Hondo No.1 Col. Tizapan-San Angel
del Centro de Economia Aplicada
01000 Mexico, D.F
Mexico
5628-4193 (Phone)
5628-4058 (Fax)