The World Bank along with the International Monetary Fund (IMF) play a crucial role in determining how much capital developing countries will receive from external sources. In this work, the factors that increased or decreased the probability of a country’s government receiving a structural adjustment loan (SAL) from either the World Bank or the IMF in the period from 1981-1993 are identified. The governments of 161 countries of the world are included in the analysis. The results of our study indicate that states associated with a higher probability of receiving a World Bank or IMF loan were poorer, had larger populations, and had higher levels of government respect for workers’ rights. The World Bank was also less likely to give a loan to a country involved in interstate conflict. While Przeworski and Vreeland (2000) had found that the IMF preferred to give loans to more authoritarian states, we found the IMF was slightly more likely to give loans to democratic states. It was also biased against giving loans to countries that had experienced recent economic growth. These findings provide evidence that both international financial institutions may be placing a higher priority on ‘good governance’ factors when making loan decisions (Kaufman et al., 2003).
