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The Rise of Supplemental Lending at the World Bank

Erasmus Kersting () and Christopher Kilby ()

No 30, Villanova School of Business Department of Economics and Statistics Working Paper Series from Villanova School of Business Department of Economics and Statistics

Abstract: World Bank projects sometimes receive supplemental loans months or years after initial project approval. The number of supplemental loans has surged after 2006, in some years accounting for 30% of all new loans. Supplemental loans can be sizeable yet come without the long approval and disbursement delays associated with new projects. In addition, they are more common for zero-interest IDA credits, making them a particularly valuable source of development finance. This paper explores the political economy of supplemental loans. We find nonpermanent United Nations Security Council membership is a strong determinant, supporting the hypothesis that fast-moving supplemental loans are particular useful for short-run incentives where time is of the essence.

Keywords: World Bank; Geopolitics of Aid; UNSC (search for similar items in EconPapers)
JEL-codes: F35 F53 O19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ppm
Date: 2016-08
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