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How defensive were lending and aid to HIPC?

Author

Listed:
  • Silvia Marchesi

    (Department of Economics, University of Milan-Bicocca)

  • Alessandro Missale

    (Dipartimento di Scienze Economiche, Aziendali e Statistiche Università di Milano)

Abstract

We examine both grants and net loans made to low income countries during the last two decades to understand the main reasons that motivated the behaviour of both donors and creditors. Our results point to an overall "mixed" evidence, concerning the hypotheses of defensive lending (and defensive granting). Specifically, while a higher level of multilateral debt negatively affects both multilateral new loans and grants to low-income countries, in the case of HIPC such "correction" does not take place at all (in the case of grants) or it is much weaker (in the case of net loans). Bilateral creditors reduce their loans as their debt exposure increases and significantly so in the case of HIPC, while bilateral donors give more grants to HIPC as their bilateral debt share increases.

Suggested Citation

  • Silvia Marchesi & Alessandro Missale, 2007. "How defensive were lending and aid to HIPC?," Working Papers 115, University of Milano-Bicocca, Department of Economics, revised 2007.
    • Handle: RePEc:mib:wpaper:115
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    References listed on IDEAS

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    Cited by:

    1. Anna Tykhonenko & Donnat Grégory, 2022. "Debt Relief: The Day After, Financing Low-Income Countries," Post-Print hal-04298772, HAL.
    2. Fløgstad, Cathrin N. & Nordtveit, Ingvild, 2014. "Lending to developing countries: How do official creditors respond to sovereign defaults?," Working Papers in Economics 01/14, University of Bergen, Department of Economics.
    3. Silvia Marchesi & Emanuela Sirtori, 2011. "Is two better than one? The effects of IMF and World Bank interaction on growth," The Review of International Organizations, Springer, vol. 6(3), pages 287-306, September.
    4. Johansson, Pernilla, 2009. "Grants to needy countries? A study of aid composition between 1975 and 2005," Working Papers 2009:19, Lund University, Department of Economics.
    5. Bjerg, Christina & Bjørnskov, Christian & Holm, Anne, 2011. "Growth, debt burdens and alleviating effects of foreign aid in least developed countries," European Journal of Political Economy, Elsevier, vol. 27(1), pages 143-153, March.

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    More about this item

    Keywords

    Debt relief; foreign aid; highly indebted poor countries;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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