The IMF in a world of private capital markets

Barry Eichengreen, Kenneth Kletzer, Ashoka Mody

Research output: Contribution to journalArticlepeer-review

24 Scopus citations


In analyzing the IMF attempts to stabilize private capital flows, we contrast cases where banks and bondholders do the lending. Consistent with banks' natural advantage in monitoring, they reduce spreads as they obtain more information through repeat transactions with borrowers. By comparison, repeat borrowing has little influence in bond markets, where publicly-available information dominates. But spreads on bonds are lower when they are issued in conjunction with an IMF-supported program, as if the existence of a program conveys positive information to bondholders. The influence of IMF monitoring in bond markets is especially pronounced for countries vulnerable to liquidity crises.

Original languageEnglish (US)
Pages (from-to)1335-1357
Number of pages23
JournalJournal of Banking and Finance
Issue number5
StatePublished - May 2006
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


  • Capital market access
  • IMF programs
  • Signaling


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