The Italian Development Bank: A Dynamic View of CDP’s Public Mission

Abstract

The traditional public purpose of development banks is to promote economic development by mitigating market failures in the provision of finance to public and private initiatives. However, the dynamic theory of public banks suggests that development banks functions and actions are not predetermined, but rather depend on the dynamic economic, social and political context in which they are embedded. In this paper we focus on the case of Cassa Depositi e Prestiti (CDP), and analyse how its mission expanded since its privatization in 2003, till and further its recognition as the Italian National Development Bank in 2015. We find that CDP range of action expanded rapidly under political, economic and institutional pressures (especially from European institutions), sometimes beyond what is traditionally expected of public banks. We also analyse how CDP corporate governance evolved, highlighting strengths and weaknesses with respect to other European Development banks.