Borrowing Costs and The Role of Multilateral Development Banks: Evidence from Cross-Border Syndicated Bank Lending
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Summary:
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.
Series:
Working Paper No. 2018/263
Subject:
Bank credit Economic sectors Financial institutions Loans Money Multilateral development institutions Public sector Syndicated loans
English
Publication Date:
December 7, 2018
ISBN/ISSN:
9781484386200/1018-5941
Stock No:
WPIEA2018263
Pages:
44
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