What are public development banks and development financing institutions ? ——qualification criteria, stylized facts and development trends

Transformation Towards Renewable Energy Systems: Evaluating the Role of Development Financing Institutions

“…DFIs are public financial institutions created and steered by governments to fulfill public policy objectives, including both multilateral development banks (MDBs) and national development banks (NDBs). Worldwide, there are over 520 DFIs from about 150 countries, which collectively hold roughly US$ 23.2 trillion in total assets (Xu et al 2021). Unlike the profit-maximizing commercial banks, DFIs are mandated to address market failures such as positive and negative externalities.…”

The maturity‐lengthening role of national development banks

“…One way to overcome the scarcity of long‐term finance is to establish national development banks (NDBs). NDBs are financial institutions initiated and steered by central governments with the official mission of fulfilling public policy objectives (Xu et al, 2021), such as financing high‐risk and long‐term projects that go beyond the risk appetite of private commercial banks (Armendáriz de Aghion, 1999). According to the world's first development financing institutions database developed by the Institute of New Structural Economics at Peking University in collaboration with the French Development Agency, the total assets of all NDBs are as much as nine trillion dollars, accounting for about 10% of global gross domestic product 1 .…”

“…2 Another explanation is that the maturity-lengthening role of NDBs may F I G U R E 1 Average ratio of loans to customers larger than 5 years. Source: Hu et al (2022) based on BankFocus data, and the first global database on public development banks and development financing institutions (Xu et al,2021) by the Institute of New Structural Economics at Peking University and French Development Agency available at www.dfidatabase.pku.edu.cn. be related to the time term of their funding sources (Griffith-Jones et al, 2018).…”

A theory of National Development Bank: long-term investment and the agency problem

“…We first show that to mitigate overrun issues resulting from the agency problem during the infrastructure construction, the government uses mixed financing strategy combining fiscal funding with NDB loans. We then endogenize the NDB investment strategy to study the determinants of NDB profit and use cross-country panel data to empirically test our model predictions.1 One hundred and fifty-two out of 218 economies worldwide have established 375 currently-active NDBs (Xu et al 2021). For example, the German NDB, Kreditanstalt fur Wiederaufbau (KfW), was created in 1948 to finance the long-term reconstruction of Germany after World War II.…”

“…1 One hundred and fifty-two out of 218 economies worldwide have established 375 currently-active NDBs (Xu et al 2021). For example, the German NDB, Kreditanstalt fur Wiederaufbau (KfW), was created in 1948 to finance the long-term reconstruction of Germany after World War II.…”