IMF lending and firm investment decisions

authored by

Pietro Bomprezzi, Silvia Marchesi, Rima Turk-Ariss

Abstract

This paper investigates the dynamic aggregate response of firm investments to the approval of an IMF arrangement, distinguishing between General Resource Account (GRA) and Poverty Reduction and Growth Trust (PRGT). Using a stacked difference-in-differences estimator and leveraging firm-level characteristics, we find that firms relying more on external finance, those more exposed to uncertainty, or those with domestic ownership tend to increase investments significantly following a GRA agreement. In contrast, the effect is much more limited in the case of PRGT financed programs. The results contribute to the growing literature on the channels through which IMF programs influence the real economy, offering nuanced insights into how these interventions shape private sector dynamics and broader economic development.

Organisation(s)

Institute of Macroeconomics

External Organisation(s)

University of Milan - Bicocca (UNIMIB)
International Monetary Fund

Type

Article

Journal

Economics letters

Volume

253

ISSN

0165-1765

Publication date

06.2025

Publication status

Published

Peer reviewed

Yes

ASJC Scopus subject areas

Finance, Economics and Econometrics

Sustainable Development Goals

SDG 1 - No Poverty, SDG 8 - Decent Work and Economic Growth

Electronic version(s)

https://doi.org/10.1016/j.econlet.2025.112382 (Access: Closed)