Who Is Credible? Government Popularity and the Catalytic Effect of IMF Lending

Sujeong Shim

Research output: Contribution to journalArticlepeer-review


In this paper, I explain variations in international investors’ reactions to International Monetary Fund (IMF) programs. Investors react favorably if a borrowing government is credibly committed to implementing essential IMF conditionality. Instead of engaging complex information processing about economic reform, however, investors rely on a heuristic device to assess the borrower’s domestic political conditions. I argue that a borrowing government’s popularity is an important cue for investors to assess the prospect of an IMF program. Investors associate higher government popularity with better implementation of the program and react more favorably to more popular borrowers. Using annual data from up to 52 emerging market economies from 1998 to 2017, I find robust statistical evidence supporting these claims: an IMF program alone does not restore investor confidence. Rather, an IMF program carried out by a strong government does. My findings have important implications for the study of global financial governance and credible commitment.

Original languageEnglish (US)
Pages (from-to)2147-2177
Number of pages31
JournalComparative Political Studies
Issue number13
StatePublished - Nov 2022


  • government popularity
  • iInternational Monetary Fund
  • international financial market
  • political economy
  • public opinion

ASJC Scopus subject areas

  • Sociology and Political Science


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