Who runs the IFIs?

Who runs the IFIs?

Riccardo Faini, University of Rome Tor Vergata and CEPR, London,
Enzo Grilli, Johns Hopkins University-SAIS, Washington D.C.*

Abstract

The World Bank and the International Monetary Fund play a key role in the international economic
architecture. Yet, they are also ‘political’ institutions and their activities inevitably respond to the
national interest of one or a group of shareholders. Assessing the role of ‘influential’ shareholders
is however made difficult by the fact that votes in the Boards of either institutions are rarely
recorded and at any rate are not made public. We take a different route and look at the pattern of
lending of both institutions as a function of their institutional mission and the commercial and
financial interests of their main shareholders. We find that the Bank and especially the Fund are
quick to respond to the borrowing needs of their members, particularly during a balance of
payments crisis. Apart from that, however, the lending pattern of the two institutions is influenced
by the commercial and the financial interests of the US and, to a lesser extent, of the EU. European
countries in particular seems to be much more concerned by their commercial interests. The role of
Japan is even smaller and more regional, being largely confined to decisions concerning Asia.

*We are grateful to Stefania di Giuseppe and Yee Wong for excellent research assistance, and to
Jessica Einhorn and Aviram Levy for useful discussions. We are solely responsible for judgments
made and conclusions reached here.

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