The use of financial institutions and legislation are some of the regulatory mechanisms for ensuring an effective Environmental Financial Assurance (EFA) implementation. Third party involvement in regulation could mitigate regulatory implementation inefficiency in developing countries. This research uses Ghana as a case study to examine the effectiveness of these two regulatory mechanisms in Ghana’s EFA policy implementation. The influence of financial institutions in environmental policy could be seen in 3 folds: as lenders, insurers and investors. Transnational companies (TNCs) are sometimes unwilling to accept regulatory reforms in developing countries because it appears they can get away with it. The knowledge that contractual agreements and legal institutions are weak also seems to allow TNCs to take advantage of the situation and hardly comply fully with the environmental regulations in developing countries.
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