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Author : Peter Nunnenkamp
Publisher : Unknown
Page : 26 pages
File Size : 53,8 Mb
Release : 1999
Category : Electronic
ISBN : UCSD:31822027772615
Author : Mr.Timothy D. Lane,Mr.Steven Phillips
Publisher : International Monetary Fund
Page : 28 pages
File Size : 54,9 Mb
Release : 2002-05-03
Category : Business & Economics
ISBN : UCSD:31822034368530
"This Economic Issue is based on IMF Working Paper WP/00/168, 'Does IMF financing result in moral hazard?', October 2000"--Page iii.
Author : Barry J. Eichengreen
Publisher : Centre for Economic Policy Research
Page : 78 pages
File Size : 44,8 Mb
Release : 2000
Category : Business & Economics
ISBN : 189812857X
Economics literature emphasizes the need to limit IMF financial rescues, but inaction is too painful. This first "Special Report" argues that institutional reforms are needed if the international policy community is to succeed in containing the moral hazard caused by IMF financial rescues.
Author : Olivier Jeanne,Jeromin Zettelmeyer
Publisher : INTERNATIONAL MONETARY FUND
Page : 25 pages
File Size : 42,7 Mb
Release : 2004-10-01
Category : Electronic
ISBN : 1451859791
Using a simple model of international lending, we show that as long as the IMF lends at an actuarially fair interest rate and debtor governments maximize the welfare of their taxpayers, any changes in policy effort, capital flows, or borrowing costs in response to IMF crisis lending are efficient. Thus, under these assumptions, the IMF cannot cause moral hazard, as argued by Michael Mussa (1999, 2004). It follows that examining the effects of IMF lending on capital flows or borrowing costs is not a useful strategy to test for IMF-induced moral hazard. Instead, empirical research on moral hazard should focus on the assumptions of the Mussa theorem.
Author : Jun Il Kim
Publisher : International Monetary Fund
Page : 42 pages
File Size : 50,7 Mb
Release : 2007-05
Category : Business & Economics
ISBN : UCSD:31822034349449
This paper develops a simple model of international lending, and calibrates it to assess quantitatively the effects of contingent IMF financial support on the risk premiums and the crisis probability. In the model, the country borrows in both short and long term; market (coordination) failure triggers a liquidity run and inefficient default; and the IMF lends unconditionally under a preferred creditor status. The model shows that IMF financial support can help prevent a liquidity crisis without causing investor moral hazard by helping to remove a distortion-effectively subsidizing ex post short-term investors (who run for the exit) at the expense of long-term investors (who are locked in). The resulting equilibrium is welfare enhancing as both the country's borrowing costs and the likelihood of a crisis are lower. The calibration exercises suggest that IMF-induced investor moral hazard-which occurs if the IMF lends at a subsidized rate-is unlikely to be a concern in practice, particularly if the country's economic fundamentals are strong and short-term debt is small.
Author : Barbara Döbeli
Publisher : Unknown
Page : 171 pages
File Size : 49,6 Mb
Release : 2002
Category : Electronic
ISBN : 390821937X
Author : Giovanni Dell'Ariccia,Isabel Schnabel,Jeromin Zettelmeyer
Publisher : International Monetary Fund
Page : 60 pages
File Size : 54,7 Mb
Release : 2002-10
Category : Business & Economics
ISBN : UCSD:31822032032443
We test for the existence of a moral hazard effect attributable to official crisis lending by analyzing the evolution of sovereign bond spreads in emerging markets before and after the Russian crisis. The nonbailout of Russia in August 1998 is interpreted as an event that decreased the perceived probability of future crisis lending to emerging markets. In the presence of moral hazard, such an event should raise not only the level of spreads, but also the sensitivity with which spreads reflect fundamentals as well as their cross-country dispersion. We find strong evidence for all three effects.
Author : Olivier Jeanne,Jonathan David Ostry,Jeromin Zettelmeyer
Publisher : INTERNATIONAL MONETARY FUND
Page : 33 pages
File Size : 43,7 Mb
Release : 2008-10-01
Category : Electronic
ISBN : 1451870949
We present a framework that clarifies the financial role of the IMF, the rationale for conditionality, and the conditions under which IMF-induced moral hazard can arise. In the model, traditional conditionality commits country authorities to undertake crisis resolution efforts, facilitating the return of private capital, and ensuring repayment to the IMF. Nonetheless, moral hazard can arise if there are crisis externalities across countries (contagion) or if country authorities discount crisis costs too much relative to the national social optimum, or both. Moral hazard can be avoided by making IMF lending conditional on crisis prevention efforts-"ex ante" conditionality.
Author : Juan Flores Zendejas,Norbert Gaillard,Rick J. Michalek
Publisher : Routledge
Page : 167 pages
File Size : 47,5 Mb
Release : 2021-12-30
Category : Business & Economics
ISBN : 9781000515022
Moral Hazard is a core concept in economics. In a nutshell, moral hazard reflects the reduced incentive to protect against risk where an entity is (or believes it will be) protected from its consequences, whether through an insurance arrangement or an implicit or explicit guarantee system. It is fundamentally driven by information asymmetry, arises in all sectors of the economy, including banking, medical insurance, financial insurance, and governmental support, undermines the stability of our economic systems and has burdened taxpayers in all developed countries, resulting in significant costs to the community. Despite the seriousness and pervasiveness of moral hazard, policymakers and scholars have failed to address this issue. This book fills this gap. It covers 200 years of moral hazard: from its origins in the 19th century to the bailouts announced in the aftermath of the COVID-19 outbreak. The book is divided into three parts. Part I deals with the ethics and other fundamental issues connected to moral hazard. Part II provides historical and empirical evidence on moral hazard in international finance. It examines in turn the role of the export credit industry, the international lender of last resort, and the IMF. Finally, Part III examines specific sectors such as automobile, banking, and the US industry at large. This is the first book to provide an interdisciplinary analysis of moral hazard and explain why addressing this issue has become crucial today. As such, it will attract interest from scholars across different fields, including economists, political scientists and lawyers.
Author : Mr.Timothy D. Lane,Mr.Steven Phillips
Publisher : INTERNATIONAL MONETARY FUND
Page : 0 pages
File Size : 41,5 Mb
Release : 2000-10-01
Category : Business & Economics
ISBN : 1451858256
The view that the IMF’s financial support gives rise to moral hazard has become increasingly prominent in policy discussions, particularly following the 1995 Mexican crisis. This paper seeks to clarify a number of conceptual issues and bring some basic empirical evidence to bear on this hypothesis. While some element of moral hazard is a logical consequence of the IMF’s financial support, such moral hazard is difficult to detect in market reactions to various IMF policy announcements and there is no evidence that such moral hazard has recently been on the rise.
Author : Mr.Eduardo Levy Yeyati
Publisher : International Monetary Fund
Page : 23 pages
File Size : 48,6 Mb
Release : 1999-07-01
Category : Business & Economics
ISBN : 9781451852387
The removal of government guarantees in borrowing countries does not eliminate the moral hazard problem posed by the existence of deposit guarantees in lender countries. The paper shows that, after restrictions on international capital flows are lifted, banks in low-risk developed countries benefit from lending funds captured in home markets at low deposit rates to high-risk/high-yield projects in emerging economies, even though these projects command lower expected returns. This, in turn, has a negative impact on bank profitability in the borrowing country, even when foreign funds are intermediated through domestic banks. The results are consistent with the surge in international bank lending flows that led to recent banking crises in Asia.
Author : Olivier Jeanne
Publisher : Unknown
Page : 26 pages
File Size : 51,7 Mb
Release : 2006
Category : Electronic
ISBN : OCLC:1291217249
Using a simple model of international lending, we show that as long as the IMF lends at an actuarially fair interest rate and debtor governments maximize the welfare of their taxpayers, any changes in policy effort, capital flows, or borrowing costs in response to IMF crisis lending are efficient. Thus, under these assumptions, the IMF cannot cause moral hazard, as argued by Michael Mussa (1999, 2004). It follows that examining the effects of IMF lending on capital flows or borrowing costs is not a useful strategy to test for IMF-induced moral hazard. Instead, empirical research on moral hazard should focus on the assumptions of the Mussa theorem.
Author : Graham Bird
Publisher : Routledge
Page : 200 pages
File Size : 51,6 Mb
Release : 2003-09-02
Category : Science
ISBN : 9781134817634
As the linchpin of the global financial system, the International Monetary Fund provides the balance of payments support, chiefly to developing countries, conditional on strict remedial policy measures. Its approach to policy remains highly controversial, however. While the Fund claims it has adapted, critics allege its policies are harshly doctrinaire, imposing hardships on already poverty-stricken people. For the critics, the half century of its existence is `fifty years too long' and radical change is essential. This book examines the arguments, tracing the extent of Fund adaption, presenting major new evidence on the consequences of fund programes, and considering its future role.
Author : Mr.Paul R. Masson,Mr.Michael Mussa
Publisher : International Monetary Fund
Page : 52 pages
File Size : 41,9 Mb
Release : 1996-12-04
Category : Business & Economics
ISBN : 1557755515
Against the background of the changing international economic environment, this pamphlet examines the general rationale for IMF financial support and the relationship between such support and IMF surveillance in carrying out the IMF's responsibility to seek to avoid and help to correct maladjustments in countries balance of payments. It analyzes the circumstances in which IMF financing continues to have an important role, draws possible lessons for the role of the IMF from the Mexican financial crisis, and discusses the future need for IMF resources.
Author : Graham Bird
Publisher : Routledge
Page : 314 pages
File Size : 45,6 Mb
Release : 2014-05-01
Category : Business & Economics
ISBN : 9781134700707
The International Monetary Fund has been criticised from both the right and the left of the political spectrum with the right arguing that it is too interventionist and creates more problems than it solves and the left on occasion demanding that it be abolished altogether. What seems almost beyond question is that the IMF needs to be reformed. Defining a future role for the IMF will always be a controversial issue, but vital to any considerations will be a measured assessment of how it has operated in the past. This excellent new book from an internationally respected expert on the IMF intends to do just that. Starting with an historical background tracing the evolution of the IMF, the book goes on to cover such themes as: *The circumstances under which countries turn to the IMF *The various aspects of IMF conditionality *Institutional issues such as lending facilities and how the fund is resourced. Bringing together an array of articles, this excellent new book will undoubtedly be required reading for anyone with a serious interest in development studies as well as being an eye-opening read for policy makers involved with the IMF.
