What determines the success or failure of german bilateral financial aid?
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- Hemmer, HR. & Lorenz, A. Rev. World Econ. (2003) 139: 507. doi:10.1007/BF02659673
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This paper explores the causes of success or failure of German bilateral financial aid, using data on 1,003 Financial Cooperation (FC) projects and programs performed by the Kreditanstalt für Wiederaufbau (KfW). The authors find that the success or failure of financial aid loans disbursed under FC depends on project characteristics and macroeconomic conditions in the recipient country. Supervision time is also highly negatively correlated with the probability of success. While the relationship disappears once endogeneity is taken into account, the existence of an institutional bias toward a disproportionate allocation of supervision resources in unsuccessful projects cannot be rejected. These results show that some recent evidence on multilateral policybased aid holds also for the case of German bilateral project-based aid.