Which limitations does the hegemon face when exerting financial statecraft through multilateral institutions? Recent studies indicate that intergovernmental organizations (IGOs) that are tools of collective financial statecraft sponsored by the United States, like the World Bank and the International Monetary Fund, lead developing states to align with Washington in the United Nations (UN). The same effect is verified in the case of US bilateral aid. Little, however, has been discussed about the effect of American-sponsored regional development banks (RDBs) in the same context. RDBs are IGOs with unique characteristics as each of them covers a region of the world and relies on resources from developed sponsors and developing borrowing members alike. In this article we aim to fill this gap in the debates on economic and financial statecraft by demonstrating through tobit models that the higher the material capabilities of a borrowing state that takes loans, the less likely it is to align with the United States at the UN General Assembly (UNGA). Membership of all RDBs but the European Bank for Reconstruction and Development (EBRD) yields the same effect. Results indicate the need to develop further research on RDBs to assess whether they create incentives for challenging the hegemon.
What makes states join intergovernmental organizations intended to challenge a hegemon? The China-led Asian Infrastructure Investment Bank (AIIB), founded in June 2015, targets the primacy of the US-led Asian Development Bank (ADB) in the Asia-Pacific region, and is a crucial case for answering this question. I argue that early AIIB members are likely to be politically distant from the US in both international and domestic terms. In contrast, subsequent states seeking AIIB membership include democratic states, existing ADB members and countries internationally aligned with the US, as measured by voting similarity at the United Nations General Assembly. Through logit models, I test these propositions and analyze which states adhered to the 2014 Memorandum of Understanding that signaled Beijing's willingness to form the Bank and which states joined the AIIB subsequently at its foundation in 2015. The results support my claim that early members tend to score low in democratic governance, while late members are US allies.
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