The World Bank has recently blacklisted 200 firms for padding contracts and bribing officials in public sector procurement awards in a number of developing countries. It must once again be stressed that private sector ownership and efficient functioning of market mechanism require certain legal and regulatory institutions.
Actual and potential counterparties are less interested in a firm’s capital ratio at the moment they extend liquidity than they are in the ability of the firm to return those funds in the future, as called for in their contractual arrangements.