Does IDA Engage in Defensive Lending?

Multilateral development banks are frequently accused of "defensive lending," the practice of extending new loans purely in order to ensure that existing loans are repaid. This paper empirically examine this hypothesis using data on lend...

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Main Authors:	Geginat, Carolin, Kraay, Aart
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ADMINISTRATIVE EXPENSES AMOUNT OF DEBT ARREARS BAILOUTS BALANCE SHEET BALANCE SHEETS BANK LENDING BANK POLICY BENCHMARK BIASES BORROWER BORROWING CAPITAL ADEQUACY CAPITAL ADEQUACY REQUIREMENTS CASH FLOWS COMMERCIAL LENDERS COMMERCIAL LENDING CREDITORS CREDITS CREDITWORTHINESS CREDITWORTHY BORROWER CREDITWORTHY BORROWERS DEBT DEBT BURDEN DEBT BURDENS DEBT ISSUES DEBT OUTSTANDING DEBT RELIEF DEBT SERVICE DEBT SERVICE OBLIGATIONS DEBT SERVICE PAYMENTS DEBT SERVICING DEBT STOCKS DEBT-SERVICE DEBTOR DEBTOR COUNTRY DEBTORS DEBTS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT BANKS DEVELOPMENT FINANCE DISBURSEMENT DISBURSEMENTS DUMMY VARIABLE DUMMY VARIABLES ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC SYSTEM ECONOMIC SYSTEMS EFFECT OF DEBT ELASTICITY EXCHANGE RATES EXTERNAL DEBT FINANCIAL COSTS FINANCIAL STATEMENTS FINANCIAL SYSTEM FUTURE DEBT GDP GDP PER CAPITA GNP GRACE PERIOD GRACE PERIODS HIGH DEBT INCOME INCOME STATEMENT INCREASE IN DEBT INDEBTED INDEBTED COUNTRIES INDEBTED POOR COUNTRIES INDEBTEDNESS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS LARGE BORROWERS LARGE DEBT LENDERS LENDING DECISIONS LEVELS OF DEBT LIQUIDITY LIQUIDITY CRISIS LOAN LOANS TO COUNTRIES MACROECONOMICS MATURITIES MONETARY FUND MORAL HAZARD MULTILATERAL DEVELOPMENT BANKS MULTILATERAL LENDER MULTILATERAL LENDERS NEGOTIATIONS NON-PERFORMING LOANS PAYMENT OF DEBT PER CAPITA INCOME PER CAPITA INCOMES PORTFOLIO PORTFOLIO PERFORMANCE POVERTY ALLEVIATION PRESENT VALUE PROCUREMENT PUBLIC POLICY RECIPIENT COUNTRIES REPAYMENT REPAYMENT CAPACITY REPAYMENT DIFFICULTIES REPAYMENT OF LOANS REPAYMENT PERIOD REPAYMENTS RULE OF LAW TOTAL DEBT TRUST FUND
Online Access:	http://documents.worldbank.org/curated/en/2007/08/8178721/ida-engage-defensive-lending http://hdl.handle.net/10986/7279

id	okr-10986-7279
recordtype	oai_dc
spelling	okr-10986-72792021-04-23T14:02:34Z Does IDA Engage in Defensive Lending? Geginat, Carolin Kraay, Aart ACCOUNTING ADMINISTRATIVE EXPENSES AMOUNT OF DEBT ARREARS BAILOUTS BALANCE SHEET BALANCE SHEETS BANK LENDING BANK POLICY BENCHMARK BIASES BORROWER BORROWING CAPITAL ADEQUACY CAPITAL ADEQUACY REQUIREMENTS CASH FLOWS COMMERCIAL LENDERS COMMERCIAL LENDING CREDITORS CREDITS CREDITWORTHINESS CREDITWORTHY BORROWER CREDITWORTHY BORROWERS DEBT DEBT BURDEN DEBT BURDENS DEBT ISSUES DEBT OUTSTANDING DEBT RELIEF DEBT SERVICE DEBT SERVICE OBLIGATIONS DEBT SERVICE PAYMENTS DEBT SERVICING DEBT STOCKS DEBT-SERVICE DEBTOR DEBTOR COUNTRY DEBTORS DEBTS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT BANKS DEVELOPMENT FINANCE DISBURSEMENT DISBURSEMENTS DUMMY VARIABLE DUMMY VARIABLES ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC SYSTEM ECONOMIC SYSTEMS EFFECT OF DEBT ELASTICITY EXCHANGE RATES EXTERNAL DEBT FINANCIAL COSTS FINANCIAL STATEMENTS FINANCIAL SYSTEM FUTURE DEBT GDP GDP PER CAPITA GNP GRACE PERIOD GRACE PERIODS HIGH DEBT INCOME INCOME STATEMENT INCREASE IN DEBT INDEBTED INDEBTED COUNTRIES INDEBTED POOR COUNTRIES INDEBTEDNESS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS LARGE BORROWERS LARGE DEBT LENDERS LENDING DECISIONS LEVELS OF DEBT LIQUIDITY LIQUIDITY CRISIS LOAN LOANS TO COUNTRIES MACROECONOMICS MATURITIES MONETARY FUND MORAL HAZARD MULTILATERAL DEVELOPMENT BANKS MULTILATERAL LENDER MULTILATERAL LENDERS NEGOTIATIONS NON-PERFORMING LOANS PAYMENT OF DEBT PER CAPITA INCOME PER CAPITA INCOMES PORTFOLIO PORTFOLIO PERFORMANCE POVERTY ALLEVIATION PRESENT VALUE PROCUREMENT PUBLIC POLICY RECIPIENT COUNTRIES REPAYMENT REPAYMENT CAPACITY REPAYMENT DIFFICULTIES REPAYMENT OF LOANS REPAYMENT PERIOD REPAYMENTS RULE OF LAW TOTAL DEBT TRUST FUND Multilateral development banks are frequently accused of "defensive lending," the practice of extending new loans purely in order to ensure that existing loans are repaid. This paper empirically examine this hypothesis using data on lending by and repayments to the International Development Association (IDA), which is the largest provider of concessional development loans to low-income countries. The authors argue that key institutional features of IDA both (i) potentially create incentives for defensive lending, and (ii) enable particularly sharp tests of the defensive lending hypothesis. The authors find that there is a surprisingly robust partial correlation between disbursements on new IDA loans and repayments on existing loans. However, a closer look at the evidence suggests that defensive lending is unlikely to be a major explanation for this partial correlation. 2012-06-06T17:47:42Z 2012-06-06T17:47:42Z 2007-08 http://documents.worldbank.org/curated/en/2007/08/8178721/ida-engage-defensive-lending http://hdl.handle.net/10986/7279 English Policy Research Working Paper; No. 4328 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING ADMINISTRATIVE EXPENSES AMOUNT OF DEBT ARREARS BAILOUTS BALANCE SHEET BALANCE SHEETS BANK LENDING BANK POLICY BENCHMARK BIASES BORROWER BORROWING CAPITAL ADEQUACY CAPITAL ADEQUACY REQUIREMENTS CASH FLOWS COMMERCIAL LENDERS COMMERCIAL LENDING CREDITORS CREDITS CREDITWORTHINESS CREDITWORTHY BORROWER CREDITWORTHY BORROWERS DEBT DEBT BURDEN DEBT BURDENS DEBT ISSUES DEBT OUTSTANDING DEBT RELIEF DEBT SERVICE DEBT SERVICE OBLIGATIONS DEBT SERVICE PAYMENTS DEBT SERVICING DEBT STOCKS DEBT-SERVICE DEBTOR DEBTOR COUNTRY DEBTORS DEBTS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT BANKS DEVELOPMENT FINANCE DISBURSEMENT DISBURSEMENTS DUMMY VARIABLE DUMMY VARIABLES ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC SYSTEM ECONOMIC SYSTEMS EFFECT OF DEBT ELASTICITY EXCHANGE RATES EXTERNAL DEBT FINANCIAL COSTS FINANCIAL STATEMENTS FINANCIAL SYSTEM FUTURE DEBT GDP GDP PER CAPITA GNP GRACE PERIOD GRACE PERIODS HIGH DEBT INCOME INCOME STATEMENT INCREASE IN DEBT INDEBTED INDEBTED COUNTRIES INDEBTED POOR COUNTRIES INDEBTEDNESS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS LARGE BORROWERS LARGE DEBT LENDERS LENDING DECISIONS LEVELS OF DEBT LIQUIDITY LIQUIDITY CRISIS LOAN LOANS TO COUNTRIES MACROECONOMICS MATURITIES MONETARY FUND MORAL HAZARD MULTILATERAL DEVELOPMENT BANKS MULTILATERAL LENDER MULTILATERAL LENDERS NEGOTIATIONS NON-PERFORMING LOANS PAYMENT OF DEBT PER CAPITA INCOME PER CAPITA INCOMES PORTFOLIO PORTFOLIO PERFORMANCE POVERTY ALLEVIATION PRESENT VALUE PROCUREMENT PUBLIC POLICY RECIPIENT COUNTRIES REPAYMENT REPAYMENT CAPACITY REPAYMENT DIFFICULTIES REPAYMENT OF LOANS REPAYMENT PERIOD REPAYMENTS RULE OF LAW TOTAL DEBT TRUST FUND
spellingShingle	ACCOUNTING ADMINISTRATIVE EXPENSES AMOUNT OF DEBT ARREARS BAILOUTS BALANCE SHEET BALANCE SHEETS BANK LENDING BANK POLICY BENCHMARK BIASES BORROWER BORROWING CAPITAL ADEQUACY CAPITAL ADEQUACY REQUIREMENTS CASH FLOWS COMMERCIAL LENDERS COMMERCIAL LENDING CREDITORS CREDITS CREDITWORTHINESS CREDITWORTHY BORROWER CREDITWORTHY BORROWERS DEBT DEBT BURDEN DEBT BURDENS DEBT ISSUES DEBT OUTSTANDING DEBT RELIEF DEBT SERVICE DEBT SERVICE OBLIGATIONS DEBT SERVICE PAYMENTS DEBT SERVICING DEBT STOCKS DEBT-SERVICE DEBTOR DEBTOR COUNTRY DEBTORS DEBTS DEPENDENT DEVELOPING COUNTRIES DEVELOPMENT BANKS DEVELOPMENT FINANCE DISBURSEMENT DISBURSEMENTS DUMMY VARIABLE DUMMY VARIABLES ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC SYSTEM ECONOMIC SYSTEMS EFFECT OF DEBT ELASTICITY EXCHANGE RATES EXTERNAL DEBT FINANCIAL COSTS FINANCIAL STATEMENTS FINANCIAL SYSTEM FUTURE DEBT GDP GDP PER CAPITA GNP GRACE PERIOD GRACE PERIODS HIGH DEBT INCOME INCOME STATEMENT INCREASE IN DEBT INDEBTED INDEBTED COUNTRIES INDEBTED POOR COUNTRIES INDEBTEDNESS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS LARGE BORROWERS LARGE DEBT LENDERS LENDING DECISIONS LEVELS OF DEBT LIQUIDITY LIQUIDITY CRISIS LOAN LOANS TO COUNTRIES MACROECONOMICS MATURITIES MONETARY FUND MORAL HAZARD MULTILATERAL DEVELOPMENT BANKS MULTILATERAL LENDER MULTILATERAL LENDERS NEGOTIATIONS NON-PERFORMING LOANS PAYMENT OF DEBT PER CAPITA INCOME PER CAPITA INCOMES PORTFOLIO PORTFOLIO PERFORMANCE POVERTY ALLEVIATION PRESENT VALUE PROCUREMENT PUBLIC POLICY RECIPIENT COUNTRIES REPAYMENT REPAYMENT CAPACITY REPAYMENT DIFFICULTIES REPAYMENT OF LOANS REPAYMENT PERIOD REPAYMENTS RULE OF LAW TOTAL DEBT TRUST FUND Geginat, Carolin Kraay, Aart Does IDA Engage in Defensive Lending?
relation	Policy Research Working Paper; No. 4328
description	Multilateral development banks are frequently accused of "defensive lending," the practice of extending new loans purely in order to ensure that existing loans are repaid. This paper empirically examine this hypothesis using data on lending by and repayments to the International Development Association (IDA), which is the largest provider of concessional development loans to low-income countries. The authors argue that key institutional features of IDA both (i) potentially create incentives for defensive lending, and (ii) enable particularly sharp tests of the defensive lending hypothesis. The authors find that there is a surprisingly robust partial correlation between disbursements on new IDA loans and repayments on existing loans. However, a closer look at the evidence suggests that defensive lending is unlikely to be a major explanation for this partial correlation.
format	Publications & Research :: Policy Research Working Paper
author	Geginat, Carolin Kraay, Aart
author_facet	Geginat, Carolin Kraay, Aart
author_sort	Geginat, Carolin
title	Does IDA Engage in Defensive Lending?
title_short	Does IDA Engage in Defensive Lending?
title_full	Does IDA Engage in Defensive Lending?
title_fullStr	Does IDA Engage in Defensive Lending?
title_full_unstemmed	Does IDA Engage in Defensive Lending?
title_sort	does ida engage in defensive lending?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2007/08/8178721/ida-engage-defensive-lending http://hdl.handle.net/10986/7279
_version_	1764402268789014528

Does IDA Engage in Defensive Lending?

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