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A macro-framework for successful development banks

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  • Janine Thorne
  • Charlotte du Toit

Abstract

The large-scale failures of development banks in the 1970s and 1980s meant that they all but disappeared from the development agenda. However, there are still a large number of development banks worldwide that operate with various degrees of success. Some governments are also looking to re-establish such banks to address the shortage of finance for higher-risk market segments. To avoid a repeat of the earlier failures, government policy needs to be informed by an objective framework for the success of these banks. This article, based on economic theory and informed by case studies, outlines such a framework. It addresses the following six dimensions of these banks: enabling environment, mandate, regulation and supervision, governance and management, financial sustainability and performance assessment. Development banking remains a risky initiative but, managed appropriately, and using this framework, it can help achieve development objectives.

Suggested Citation

  • Janine Thorne & Charlotte du Toit, 2009. "A macro-framework for successful development banks," Development Southern Africa, Taylor & Francis Journals, vol. 26(5), pages 677-694.
    • Handle: RePEc:taf:deveza:v:26:y:2009:i:5:p:677-694
    DOI: 10.1080/03768350903303183
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    References listed on IDEAS

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    1. Shirley, Mary M & Xu, Lixin Colin, 2001. "Empirical Effects of Performance Contracts: Evidence from China," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 17(1), pages 168-200, April.
    2. Yaron, J., 1992. "Assessing Development Finance Institutions; A Public Interest Analysis," World Bank - Discussion Papers 174, World Bank.
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    Cited by:

    1. Thorsten Beck & Samuel Munzele Maimbo & Issa Faye & Thouraya Triki, 2011. "Financing Africa : Through the Crisis and Beyond," World Bank Publications - Books, The World Bank Group, number 2355.
    2. Régis MARODON, 2020. "Les banques de développement peuvent-elles relever le défi du développement durable ?," Working Paper 8eb18544-95bf-404e-bbfe-e, Agence française de développement.
    3. World Bank, 2013. "Mongolia : Improving Public Investments to Meet the Challenge of Scaling Up Infrastructure," World Bank Publications - Reports 13256, The World Bank Group.
    4. Maria Alejandra RIAÑO & Jihane BOUTAYBI & Damien BARCHICHE & Sébastien TREYER, 2020. "Scaling up public development banks’ transformative alignment with the 2030 Agenda for Sustainable Development," Working Paper 8ae70006-df09-4050-910f-c, Agence française de développement.
    5. Riham Shendy & Zachary Kaplan & Peter Mousley, 2011. "Toward Better Infrastructure : Conditions, Constraints, and Opportunities in Financing Public-Private Partnerships in Select African Countries," World Bank Publications - Books, The World Bank Group, number 2331.
    6. Fatih Kayhan & Onur Özdemir, 2022. "The Lending Behavior of Investment and Development Banks in Turkiye: Evidence from Quantile Regression Approach," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 72(72-1), pages 239-267, June.
    7. repec:avg:wpaper:en11710 is not listed on IDEAS
    8. Régis MARODON, 2020. "Can development banks step up to the challenge of sustainable development?," Working Paper 8eb18544-95bf-404e-bbfe-e, Agence française de développement.

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