Saturday, April 15, 2006

International Corporate Governance and the World Bank

Apparently, the International Finance Corporation (IFC), the investment-arm of the World Bank, requires the implementation of certain good corporate governance practices as a major condition in its international lending.

What are these good corporate governance practices? World Bank/IFC does not throw out the words lightly. The World Bank and IMF have done detailed corporate governance assessments on 15 countries and evaluated them on the basis of the OECD principles of corporate governance. Learn more about these studies here.

As a related aside, what role does a lender usually play in corporate governance?
In the U.S. it would be unusual to see corporate governance practices enforced as a prerequisite to lending by lenders or banks. I expect this may be more the norm in bank-centric European economies or the Japanese economy, but a cursory search could not find any evidence to that effect.

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