![]() Most narrowly, it adds to literature on the structure of developing country sovereign debt. The other is a demand side explanation, where less-transparent borrowers use China to avoid Western creditors that condition finance on increased borrower transparency, which would expose elites in untransparent countries to political risk.Ī relationship between borrower government transparency and shares of Chinese vis-à-vis Western finance has several implications. One is a supply side explanation, where China prefers lending to less-transparent countries because this helps its lending practices avoid unwanted scrutiny. A correlation between lack of borrower transparency and increased Chinese finance has two plausible explanations. It finds less-transparent developing countries obtain more Chinese than Western official credit. This study adds borrower transparency to this literature. Others find Chinese finance increases local corruption over time (Brazys et al., 2017 Isaksson & Kotsadam, 2018a), but not the extent to which such borrower institutional characteristics determine Chinese flows in the first place. Some evidence suggests democratic governance does not systematically affect Chinese flows (Broich, 2017 Bunte, 2019). Footnote 2 Less clear is the effect of borrower institutions. Why do developing countries receive different amounts of official Chinese finance? Footnote 1 Most studies emphasize China’s political and economic interests in explaining credit allocation.
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