Financial Additionality of Multilateral Development Banks in Private Participation in Infrastructure Projects

Hiroyuki Taguchi () and Kota Yasumura
Additional contact information
Kota Yasumura: Graduate School of Humanities and Social Sciences, Saitama University, Saitama 338-8570, Japan

Sustainability, 2021, vol. 13, issue 15, 1-15

Abstract: This paper aims to provide empirical evidence for demonstrating financial additionality of multilateral development banks (MDBs) in private participation in infrastructure (PPI) projects in terms of financing beyond what is available in the markets. To verify MDB financial additionality, this study examines whether the PPI projects with multilateral support have significantly larger investment commitments than the total average projects by using the PPI database of the World Bank for 1996–2020. The empirical analysis identifies MDB financial additionality, in that the larger investment commitments of multilateral-supported projects beyond the average are confirmed in any income levels and regions in host countries and any sectors and types in the projects. In particular, MDB financial additionality is valid even in low-income countries where private finance is still too premature to be available. In the host countries where their government effectiveness is in the poorest edge, however, MDB financial additionality loses its significance, thereby requiring the governance enhancement and capacity building in the host countries and innovative blended finance instruments for its additionality to work.

Keywords: financial additionality; multilateral development banks; private participation in infrastructure; investment commitments; government effectiveness (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/15/8412/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/15/8412/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:15:p:8412-:d:603029

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().