The World Bank and IMF in the Development and Monitoring of International Corporate Governance
This increases the accountability and transparency in responding to the issues that are raised by the shareholders. Good corporate governance increase access to capital by encouraging new investors thus boosting economic growth and creating employment opportunities. Therefore, the World Bank through the International Finance Corporation collaborates with corporations globally to attract and retain investment through the promotion and adoption of good international corporate governance practices and standards (Ifc. org, 2018). This is in line with the organization’s mission of reducing poverty, especially in the developing world by offering developmental assistance. They are expected to maintain the customer trust and protect their funds. They are thus able to build and maintain integrity and stability in the economy by maintaining a high level of confidence in the economy.
Misdeeds in the financial sector are likely to trigger a wave of events likely to affect other areas of the economy. There is a growing demand for improved corporate governance in the emerging, and developing countries seek to improve to increase their chances of gaining international funding (Bird and Rowlands, 2000). The governance also extends to the state-owned banks in facilitating the development of policies and ownership among other factors. Setting Standards and Codes The IMF as an institution is tasked with the role of promoting international monetary and financial stability; the organization is, therefore, eager to develop and implement standards and codes that can assist in reducing the risks and impacts of the financial crises. The World Bank in its mandate of promoting long-term economic development works in collaboration with the private financial sectors in the developing and emerging countries.
Therefore in the efforts to promote the development of international corporate governance, the institution has constituted a board that consists of experts who are available to assist in the development and implementation of codes depending on the needs (Baum, Caglayan and Ozkan, 2012). Critical Evaluation In a case example, the IMF and the World Bank after the 1990s Asian crisis made a significant effort in the development and implementation of the codes to prevent and caution countries in case of such crises in future. However, the targeted countries voiced their contention on the codes noting that ranking countries on the measure of the level of compliance and punishing those who do not comply by denying them access to finances would not solve the governance issues.
The group works in collaboration with the target countries to implement the diagnostic strategies, enhancing legal and regulatory frameworks, building capacity for the regulators and supervisors, and finally offering advisory, training, and knowledge sharing. The CG also strives to raise awareness on corporate governance through conferences, workshop and periodic publications on the corporate governance issues (imf. org, 2018). IFC as an organization leads by example in ensuring all transactions are evaluated on adherence to the corporate governance strategies. The methods are geared towards assisting the client members in identifying the potential risks and opportunities available in their regions and actin the best interests of their corporations (icf. Such examples include organization of workshops and studies, seminars, and fostering regulations encouraging the appointment of women on the board.
Such efforts have been effective with countries such as India adopting laws that demand organizations to appoint at least one female in their board (Plehwe, 2007; Hartarska, 2005). In highlighting the successful implementation and impacts of the efforts, a World Bank publication noted the growing interests in the developing markets. Owing to the IMF and the World Bank efforts on improving international corporate governance, companies in the regions have been able to adhere to the international standards and thus able to receive funds from international investors. There was a substantive increase in interests in the region with a 28% increase in the foreign direct funding. During the visit, they indulge in concise discussions with the government and officials of the central bank to gain insights on domestic risks and global stability.
The discussions revolve around the monetary, fiscal, and regulatory policies and as well macro-critical structural reforms. The IMF staffs as well gain insights from other members of the government such as the legislature, and as well representatives from the business community, labor movements, and civil societies among others. A wide discussion with various stakeholders yields a comprehensive view of a country’s economic policy and prospects. The staffs then produce a report that is discussed by the executive board. Owing to the dynamic nature of the world economy, IMF periodically reviews its monitoring activities. Examples include the 2014 Triennial Surveillance Review and the 2012 Financial Surveillance Strategy (IMF Surveillance, 2018). Critical Evaluation The IMF monitoring work is a good example of global economic coordination effort with diverse advantages to the economies.
The organization can collect data from different countries and compile a report that is sourced from different sectors. These reports when analyzed inform the stakeholders of the country’s position and growth prospects. The key focus is on the financial sector and the capital markets as they impact all other sectors. In the monitoring roles, the IMF conducts annual visits to the member countries and collect data from various stakeholders. The data is analyzed and discussed by the Board Members. Their views are communicated to the respective countries are at liberty to share it with the public or not. The organization publishes periodic reports on various economic aspects and outlooks. THE IMF: A BIRD'S EYE VIEW OF ITS ROLE AND OPERATIONS.
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