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The Rise of Supplemental Lending at the World Bank

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Abstract

World Bank projects sometimes receive supplemental loans months or years after initial project approval. The number of supplemental loans has surged after 2006, in some years accounting for 30% of all new loans. Supplemental loans can be sizeable yet come without the long approval and disbursement delays associated with new projects. In addition, they are more common for zero-interest IDA credits, making them a particularly valuable source of development finance. This paper explores the political economy of supplemental loans. We find nonpermanent United Nations Security Council membership is a strong determinant, supporting the hypothesis that fast-moving supplemental loans are particular useful for short-run incentives where time is of the essence.

Suggested Citation

  • Erasmus Kersting & Christopher Kilby, 2016. "The Rise of Supplemental Lending at the World Bank," Villanova School of Business Department of Economics and Statistics Working Paper Series 30, Villanova School of Business Department of Economics and Statistics.
    • Handle: RePEc:vil:papers:30
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    Cited by:

    1. Christopher Kilby & Carolyn McWhirter, 2022. "The World Bank COVID-19 response: Politics as usual?," The Review of International Organizations, Springer, vol. 17(3), pages 627-656, July.
    2. Heinzel, Mirko & Reinsberg, Bernhard, 2024. "Trust funds and the sub-national effectiveness of development aid: evidence from the World Bank," LSE Research Online Documents on Economics 122593, London School of Economics and Political Science, LSE Library.
    3. Axel Dreher & Katharina Michaelowa, 2008. "The political economy of international organizations," The Review of International Organizations, Springer, vol. 3(4), pages 331-334, December.
    4. Richard Clark & Lindsay R. Dolan, 2021. "Pleasing the Principal: U.S. Influence in World Bank Policymaking," American Journal of Political Science, John Wiley & Sons, vol. 65(1), pages 36-51, January.
    5. Heinzel, Mirko & Reinsberg, Bernhard, 2024. "Trust funds and the sub-national effectiveness of development aid: Evidence from the World Bank," World Development, Elsevier, vol. 179(C).

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    More about this item

    Keywords

    World Bank; Geopolitics of Aid; UNSC;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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