Impact of World Bank lending in an adjustment-led growth model

Within a financial- and growth-programming framework, this paper develops a policy-driven growth model and addresses the effects of World Bank lending on economic growth in a sample of 30 countries, after having controlled for the effects of key macroeconomic variables. Both static and dynamic panel estimates suggest a positive significant effect of the rate of growth in World Bank lending on economic growth, conditional on other variables, namely changes in exchange rate, domestic credit growth, and inflation. Empirical evidence also reveals the positive effect of a macroeconomic policy index in this sample of developing countries.