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Development Bank: History
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Contributor: Luyun Yu

A development bank is a financial institution established or supported to provide financing for economic and social development objectives, particularly in areas where commercial financing may be insufficient, unavailable, or poorly suited to long-term investment needs [1][2]. Unlike conventional commercial banks, which primarily allocate credit according to commercial returns and risk assessments, development banks have an explicit developmental mandate that guides their financing priorities [1][2]. They may provide long-term loans, equity investments, guarantees, and other financial instruments to support infrastructure, industrial development, agriculture, small and medium-sized enterprises, and other sectors identified as important for development [1][3]. Depending on their ownership, membership, and geographic scope, development banks may operate at the national, regional, or multilateral level. Public development banks are generally established or steered by governments to pursue public policy objectives, whereas multilateral development banks are formed by multiple member countries to finance development across countries or regions [2][3]. Development banks are distinct from ordinary commercial banks in their institutional mandate, although they may also be expected to maintain financial sustainability and assess the viability of the projects they finance. The term therefore refers to a category of development-oriented financial institutions rather than to a single organization or a uniform banking model.

  • development finance
  • long-term lending
  • public development banks
  • multilateral development banks
  • economic development

 Economic Growth and Development •  Information Systems •  Computer Science •  Physical Sciences

References

  1. Diamond, W. (1965). Development Finance Companies. Finance & Development. International Monetary Fund. https://www.elibrary.imf.org/view/journals/022/0002/002/article-A005-en.xml
  2. Jiajun Xu; Régis Marodon; Xinshun Ru; Xiaomeng Ren; Xinyue Wu; What are public development banks and development financing institutions ? ——qualification criteria, stylized facts and development trends. China Econ. Q. Int. 2021, 1, 271-294, 10.1016/j.ceqi.2021.10.001.
  3. World Bank. How the World Bank Group Operates. https://documents1.worldbank.org/curated/en/680451468177849892/pdf/405190Guide0to101OFFICIAL0USE0ONLY1.pdf
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