Institute of International Finance Proposes Reforms; IIF's Equity Advisory Group Releases Report
"Establishing an equity culture and building a modern system of corporate governance presents major challenges in Lebanon today. The country's nascent equity market is the product of many years of strife and a culture of family ownership of businesses," said Edward Baker, Chief Investment Officer of Global Emerging Markets, Alliance Capital Management, and Chairman of the Equity Advisory Group of the Institute of International Finance (IIF).
In releasing a report on the state of corporate governance in Lebanon today, the IIF noted that the country's equity market is relatively underdeveloped compared to other countries in the region. Total market capitalization of the 16 companies listed on the Beirut Stock Exchange (BSE) stood at $3.3 billion at the end of June 2005, about 15 percent of total GDP. In contrast, Lebanon's banking sector is large in relation to the economy, and commercial banks are well-capitalized and profitable. Bank financing and retained earnings have been the main source of funding for most businesses, with little demand to date for equity financing.
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