Low Income Countries, Credit Rationing and Debt Relief: Bye bye international financial market?

Marc Raffinot (1) , Baptiste Venet (1)

1 LEDa - Laboratoire d'Economie de Dauphine

LICs have no access to international financial markets. Since the nineties, LICs have been granted debt relief by bilateral creditors andby international financing institutions, namely from 1996 on underHighly Indebted Poor Countries (HIPC) Initiative and from 2005 onunder Multilateral Debt Relief Initiative (MDRI). Did those debt relief initiatives send a negative message to the lenders, deterring themto lend to the LICs? For assessing this we use the concessionality rate of new financing flows as a measurement of the “distance to the market” and assess the impact of debt relief on the concessionality rate implementing a Granger causality tests using panel data, a methodology perfected by Hurlin (2004, 2005) and Hurlin and Venet (2004).We show that countries with high concessionality resources are morelikely to get debt relief, but that debt relief does not "cause" higher concessionality.

Mots clés: Debt relief; Low Income countries; Causality in panels; Access to the market

Domaines: Economies et finances

Marc Raffinot, Baptiste Venet. Low Income Countries, Credit Rationing and Debt Relief: Bye bye international financial market?. 2017. ⟨hal-01489954⟩