Role of international finance institutions

In the six years since my last report2 members of the International Finance and Macroeconomics Program have written over working papers. Many have been published subsequently in leading journals. There is not space here to summarize all or most of them. Instead, I will concentrate on recent research on international macroprudential regulation.

Role of international finance institutions

China in Africa These state driven institutions have vast resources at their disposal and are able to provide discounted loans to Chinese corporations on the overseas acquisition trail not necessarily subject to the same rigorous accountability and transparency constraints that govern Western business ventures.

It is this golden triangle that exists between Chinese companies, the state and quasicommercial lending institutions that provide Chinese oil companies with cheap finance to undercut their Western competitors. The China Development Bank, for example, is the largest quasi-commercial bank in the world.

CITIC Resources, a subsidiary of CITIC, which specializes in equity investments in energy and natural resources, has also been working closely in putting together oil deals involving Chinese oil companies in several African countries, most notably Chad and Nigeria.

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Only US legislators were able to stop the deal from going through. That, analysts say, helped Huawei undercut competitors' bids by as much as 70 percent and offer vendor-financed loans. Lending rates at the time were well below the 6,39 percent benchmark oneyear lending rate in China — sometimes as low as one or two percent.

All this amounts to subsidized risk investment — courtesy of the Chinese tax payer. Innumerous instances, a Western mining company for example cannot commit to infrastructure to secure a mining project which Chinese companies are able to do with the assistance of Chinese banks, geared specifically at resource acquisition ventures.

Another strategy being used by Chinese financial institutions to facilitate trade and investment is buying into overseas banks which have an extensive African footprint, by way of branches and clientele. China complemented this purchase by acquiring a stake in the United Kingdom banking house of Barclays.

These purchases guarantee Chinese access to powerful interests in the financial community of key African countries, and facilitate investment through non-bilateral government to government arrangements.

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In addition, the China Exim Bank is the only Chinese institution that is empowered to provide concessional loans to overseas projects.

While this approach is by no means novel or unique, and follows a long history of natural resource - based transactions in the oil industry - China has taken its implementation to a higher level. The arrangement is used for countries that cannot provide adequate financial guarantees to back their loan commitments and allows them to package natural resource exploitation and infrastructure development.

On average, the Chinese loans offer an interest rate of 3,6 percent, a grace period of 4 years, and a maturity of 12 years. Overall, this represents a grant element of around 36 percent, which qualifies as concessional according to official definitions.

However, the variation around all of these parameters is considerable across countries; thus interest rates range from as low as 0,25 as in the case of Angola to 6 percent, grace periods from 2 to 10 years, maturities from 5 to 25 years, and overall grant elements from 10 to 70 percent.

Chinese loans compare favorably with private sector lending to Africa but are not as attractive as ODA, which tends to provide a grant element of around 66 percent to Africa.

In the case of concessional loans, there is a requirement that a Chinese enterprise be selected as the contractor or exporter.

Moreover, no less than 50 percent of the equipment, materials, services, or technology needed to implement the project should be secured from China.

Role of international finance institutions

In the Angolan case, the figure was even higher at 70 percent.Loren Bushkar, Managing Director, Global Membership. Loren Bushkar is the Managing Director of the Global Membership Department at the Institute of International Finance (IIF).

International finance is a section of financial economics that deals with the monetary interactions that occur between two or more countries.

International Finance

Global Finance at Risk: The Case for International Regulation [John Eatwell, Lance Taylor] on *FREE* shipping on qualifying offers. In Global Finance at Risk, two economists whom John Kenneth Galbraith has hailed as “accomplished scholars of the first rank” propose a bold solution to the financial crises that threaten us all: a World Financial Authority with powers to.

Microfinance initially had a limited definition - the provision of microloans to poor entrepreneurs and small businesses lacking access to bank and related services.

The two main mechanisms for the delivery of financial services to such clients were: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come.

The vast majority of infrastructure financing arrangements done by China in the African continent are financed by the China Exim Bank, which (like any Exim bank) is devoted primarily to providing export seller’s and buyer’s credits to .

The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in developing IFC is a member of the World Bank Group and is headquartered in Washington, was established in , as the private-sector .

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