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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Institutions

Which of the following international institutions is primarily known for lending to the private sector in developing countries and taking equity stakes in private enterprises, as the private-sector arm of the World Bank Group?

The International Finance Corporation is the World Bank Group's private-sector arm. It provides loans, equity and advisory support to private companies in developing countries, unlike IDA, which lends concessionally to governments, or the IMF, which addresses balance-of-payments problems.

  1. AInternational Finance Corporation (IFC)Correct
  2. BInternational Monetary Fund (IMF)
  3. CBank for International Settlements (BIS)
  4. DInternational Development Association (IDA)

Explanation

IFC is the World Bank Group member that invests in and lends to private-sector firms in developing economies, including equity and loans. IDA provides concessional credit to governments of the poorest countries, so it is not a private-sector financier. The IMF deals with balance-of-payments support and the BIS is a central bank forum.

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