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Deutschen Bundesbank, Volkswirtschaftliches Forschungszentrum >
Discussion Paper Series 1: Economic Studies >
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http://hdl.handle.net/10419/19469
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| Titel: | Does co-financing by multilateral development banks increase "risky" direct investment in emerging markets? |
| Autoren: | Wezel, Torsten |
| Datum: | 2004 |
| Verleger: | |
| Reihe/Nr.: | Discussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank 2004,02 |
| Zusammenfassung: | The paper discusses the question of whether financial participation of multilateral
development banks does prompt private investors to inject more risky equity capital in
emerging market banks. Using a theoretical model, it is stipulated that the presence of an
official lender in a project gives the recipient country a stronger economic incentive to honor
its contractual obligations instead of possibly restricting access to the investment position. An
innovative endogenous variable measuring the amount of invested equity capital which, given
a country?s historical risk profile, can be considered ?at risk? is tested in the empirical
investigation. The observed outcome for the group of investors receiving co-financing by the
International Finance Corporation (IFC) and/or the European Bank for Reconstruction and
Development (EBRD) is related ? applying a propensity score matching approach using
information on the characteristics of non-participants ? to the amount these firms would have
invested had they not been selected for official support. The econometric results show that the
?treatment effect? is significantly positive as stipulated. That is, in the German case financial
participation of multilateral agencies in investment projects did have a positive impact on the
risk exposure that investors were willing to bear. |
| Erscheint in der Sammlung: | Discussion Paper Series 1: Economic Studies
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