1. Multilateral Development Banks: Counter-cyclical Mandate and Financial Constraints
- Author:
- Andrea Molinari and Leticia Patrucchi
- Publication Date:
- 09-2020
- Content Type:
- Journal Article
- Journal:
- Contexto Internacional
- Institution:
- Institute of International Relations, Pontifical Catholic University of Rio de Janeiro
- Abstract:
- Given their attractiveness as a source of financing for the least developed countries, mul- tilateral development banks (MDBs) have grown in quantity and size supported by their sources of financing. We believe that this ‘resource dependency’ has not been sufficiently questioned in the lit- erature, especially regarding the credit exposure these organizations have with their largest borrow- ing members. This article characterizes and identifies the differential effects of the three sources that make up the dependence on resources in the MDBs: capital contributions, leverage in the markets and their credit function. We analysed these sources particularly at the International Development Bank (IBRD), the Inter-American Development Bank (IDB) and the African Development Bank (AfDB) and in two recent events: the risk exchange implemented by the referred MDBs in 2015 and the effect of the Argentina’s selective default on the IDB’s capital adequacy (2014). We find an increasing relevance of leverage and the size of loans, which models a dependence on resources that weakens the development mandate of these organizations.
- Topic:
- Development, Finance, Multilateralism, and Banks
- Political Geography:
- Global Focus