IMF Concern for Reputation and Conditional Lending Failure: Theory and Empirics

Silvia Marchesi and Laura Sabani

No 206, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: In this paper we suggest that the dual role played by the IMF, as a creditor and as a monitor of economic reforms, might explain the lack of credibility of the Fund threat of sanctioning non-compliance with conditionality. Specifically, we show that the IMF desire to preserve its reputation as a good monitor may distort its lending decisions towards some laxity. Moreover, such distortionary incentives may be exacerbated by the length of the relationship between a country and the Fund. Estimating a dynamic panel of 53 middle-income countries, for the period 1982-2001, we find that a longer relationship does increase IMF disbursements.

Keywords: IMF programmes; conditionality; incomplete information; reputation; dynamic panel (search for similar items in EconPapers)
JEL-codes: C23 D82 F34 N2 (search for similar items in EconPapers)
Date: 2005-06-15
New Economics Papers: this item is included in nep-fmk
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: IMF concern for reputation and conditional lending failure: Theory and empirics (2007)
Working Paper: IMF concern for reputation and conditional lending failure: theory and empirics (2007)
Working Paper: IMF concern for reputation and conditional lending failure: theory and empirics (2005)
Working Paper: IMF concern for reputation and conditional lending failure: theory and empirics (2005)
Working Paper: IMF concern for reputation and conditional lending failure: theory and empirics (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:206

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