An Empirical Assessment of Informal Influence in the World Bank
Recent scholarship has uncovered convincing evidence of systematic donor influence in international financial institutions such as the World Bank. Less clear is how donors influence international financial institutions' decisions. Possible avenues are formal and informal: formal influence through official decisions of the Board of Executive Directors and informal influence over decisions not made at the board level. This article explores the role of informal influence at the World Bank by examining the flow of funds after loans are approved. Controlling for commitments (loan approvals), are subsequent disbursements linked to the geopolitical interests of important donors? Since the Board of Executive Directors is formally involved in loan approval but not in disbursement decisions, this provides an interesting case to identify the avenues of influence. The results indicate the scope of reforms needed to bolster the independence of the World Bank.
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