Room for discretion?: biased decision-making in international financial institutions
We exploit the degree of discretion embedded in the World Bank-IMF Debt Sustainability Framework (DSF) to understand the decision-making process of international financial institutions. The unique, internal dataset we use covers the universe of debt sustainability analyses conducted between December...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article (Journal) |
| Language: | English |
| Published: |
2018
|
| In: |
Journal of development economics
Year: 2017, Volume: 130, Pages: 1-16 |
| ISSN: | 0304-3878 |
| DOI: | 10.1016/j.jdeveco.2017.09.001 |
| Online Access: | Verlag, Volltext: https://doi.org/10.1016/j.jdeveco.2017.09.001 Verlag: http://www.sciencedirect.com/science/article/pii/S0304387817300640 
|
| Author Notes: | Valentin F. Lang, Andrea F. Presbitero |
| Summary: | We exploit the degree of discretion embedded in the World Bank-IMF Debt Sustainability Framework (DSF) to understand the decision-making process of international financial institutions. The unique, internal dataset we use covers the universe of debt sustainability analyses conducted between December 2006 and January 2015 for low-income countries. These data allow us to identify cases where the risk rating implied by the application of the DSF's mechanical rules was overridden to assign a different official rating. Our results show that both political interests and bureaucratic incentives influence the decision to intervene in the mechanical decision-making process. Countries that are politically aligned with the institutions' major shareholders are more likely to receive an improved rating; especially in election years and when the mechanical assessment is not clear-cut. These results suggest that the room for discretion international financial institutions have can be a channel for informal governance and a source of biased decision-making. |
|---|---|
| Item Description: | Online 14 September 2017 Gesehen am 30.10.2019 |
| Physical Description: | Online Resource |
| ISSN: | 0304-3878 |
| DOI: | 10.1016/j.jdeveco.2017.09.001 |