Does IMF Financing Result in Moral Hazard?

October 1, 2000

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Format: Chicago

Steven T Phillips, and Timothy D. Lane Does IMF Financing Result in Moral Hazard?, (USA: International Monetary Fund, 2000) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The view that the IMF’s financial support gives rise to moral hazard has become increasingly prominent in policy discussions, particularly following the 1995 Mexican crisis. This paper seeks to clarify a number of conceptual issues and bring some basic empirical evidence to bear on this hypothesis. While some element of moral hazard is a logical consequence of the IMF’s financial support, such moral hazard is difficult to detect in market reactions to various IMF policy announcements and there is no evidence that such moral hazard has recently been on the rise.

Subject: Emerging and frontier financial markets, Financial crises, Financial institutions, Financial markets, Financial sector policy and analysis, Financial services, Moral hazard, Systemically important financial institutions, Yield curve

Keywords: Asia and Pacific, Disbursement policy, Emerging and frontier financial markets, Financing package, Fund financial support, Fund program, IMF, IMF action, IMF disbursement, IMF financing, IMF funds, IMF governor, IMF lending, IMF response, IMF staff estimate, Liquidity position, Moral hazard, Systemically important financial institutions, WP, Yield curve

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/168
Stock No:

WPIEA1682000
ISBN:

9781451858259
ISSN:

1018-5941

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