Bargain Down or Shop Around? Outside Options and IMF Conditionality

When do overlapping international organizations (IOs) become credible outside options for states seeking forum shopping opportunities? Utilizing an original data set on cooperation among emergency lending IOs, I find that exit options boost states’ bargaining leverage only when IOs compete as opposed to cooperate with one another. While the literature frames the International Monetary Fund (IMF) as a monopoly organization, I show that it increasingly competes with regional financing arrangements (RFAs). When RFAs compete with the IMF, they become credible exit options that member states can leverage in negotiations over conditional lending at the Fund. I first offer original descriptive analysis of patterns of cooperation among these IOs. I then hypothesize that members of IOs that compete with the IMF, but not members of cooperative institutions, ought to receive less intrusive conditionality from the Fund. A series of regressions lend support for my theory, as do supplemental interviews and text analysis.