Coping with Disasters : Two Centuries of International Official Lending
Official ending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during wars, financial crises and natural catastrophes. This paper assembles the first comprehensive long-run dataset of offic...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/858211617653033046/Coping-with-Disasters-Two-Centuries-of-International-Official-Lending http://hdl.handle.net/10986/35407 |
| Summary: | Official ending is much larger than
commonly known, often surpassing total private cross-border
capital flows, especially during wars, financial crises and
natural catastrophes. This paper assembles the first
comprehensive long-run dataset of official international
loans, covering 230,000 loans, grants and guarantees
extended by governments, central banks, and multilateral
institutions in the period 1790–2015. Historically, wars
have been the main catalyst of government-to-government
lending. The scale of official credits granted in and around
WW1 and WW2 was particularly large, easily surpassing the
scale of total international bailout lending after the 2008
crash. During peacetime, development finance and financial
crises are the main drivers of official cross-border
finance, with official flows often stepping in when private
flows retrench. In line with predictions of recent
theoretical contributions, this paper finds that official
lending increases with the degree of economic integration.
In financial crises, governments help those countries to
which they have greater trade and banking exposure, hoping
to reduce the collateral damage to their own economies.
Since the 2000s, official finance has made a sharp comeback,
largely due to the rise of China as an international
creditor and the return of central bank cross-border lending
in times of stress, this time through swap lines. |
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