Date of Conferral

2016

Degree

Doctor of Business Administration (D.B.A.)

School

Management

Advisor

Dr. Roger Mayer

Abstract

Multilateral development banks (MDBs) are under increased pressure to justify their allocation of donor resources. These funds help produce growth in developing regions such as Central America (CA), where wealth inequality limits individuals' access to basic services and increases the prevalence of crime and corruption. MDB leaders are not always confident the allocation of limited resources creates optimal value. The capital asset price model (CAPM) was the theoretical framework of this correlational study. Archival data consisting of annual reports and audited financial statements were used to draw a sample (N = 66) of USD $4.857-asset valued loans made by MDBs between 1995-2013 in 7 CA countries. Regression analysis was used to determine the significance of relationships between the independent variables including the risk-free rate of return (Rf), volatility of a project (βp), and expected return on the market (Rm) and the dependent variable, the expected return (rp) used by MDBs. No evidence of a statistically significant relationship between the expected return of individual loans (adjusted for risk-free rate, volatility, and market return) and the expected return used by MDBs was found using correlational analysis. Findings from multiple regression analysis indicated that the expected return used by MDBs underperforms risk-adjusted market expectations. Study findings may help MDB leaders to promote business development and social welfare in CA through private investments, which may result in positive social change.

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