Private Interest Based Multilateral Loans

Julien Reynaud (Université Paris 1)
Julien Vauday (CNRS - Université Paris 13)

Abstract: Firms' interests are nowadays disseminated worldwide. When a country is facing a crisis, many foreign firms' interests may be threatened. This paper investigates the effect domestic lobbying may have on International Financial Institutions (IFIs) loans decisions or multilateral loans. This paper also explores the interconnections between political and diplomatic interests. The main result is that lobbying may raise the probability of a consensus for two reasons. First, its position may be closer of the mean position of the international community. Second, it can increase the range over which its government gains if the loan is granted. Lastly, a high diplomatic proximity with the country facing the crisis may reduce the effect of lobbying whereas the share of the population the lobby represents increases the positive effect of lobbying on the probability of reaching a consensus.

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