Does partnering with the World Bank shield investors from political risks in less developed countries?

Research output: Contribution to journalArticle

Abstract

This study explores whether partnering with the World Bank's International Finance Corporation (IFC) protects foreign investors from aggressive actions by host countries’ governments. Building on the obsolescing bargaining model, we theorize that host states fear that hostile actions towards IFC-supported investments will damage their relationships with the World Bank. Within this context IFC support deters host government aggression towards investments. We assess our argument using country-level panel data as well as interviews with a sample of high-level managers. Findings suggest that IFC-support helps to reduce host state aggression against investing firms.

Original languageEnglish (US)
Article number100997
JournalJournal of World Business
Volume54
Issue number5
DOIs
StatePublished - Nov 1 2019

Fingerprint

International finance
Investors
Partnering
World Bank
Political risk
Less developed countries
Government
Aggression
Bargaining model
Panel data
Managers
Damage
Foreign investors
Investing
Host country

Keywords

  • International Finance Corporation
  • Obsolescing bargaining model
  • Political risk
  • State-business relations
  • World Bank

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Marketing

Cite this

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title = "Does partnering with the World Bank shield investors from political risks in less developed countries?",
abstract = "This study explores whether partnering with the World Bank's International Finance Corporation (IFC) protects foreign investors from aggressive actions by host countries’ governments. Building on the obsolescing bargaining model, we theorize that host states fear that hostile actions towards IFC-supported investments will damage their relationships with the World Bank. Within this context IFC support deters host government aggression towards investments. We assess our argument using country-level panel data as well as interviews with a sample of high-level managers. Findings suggest that IFC-support helps to reduce host state aggression against investing firms.",
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