Michael Brei and Alfredo Schclarek
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0011
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
This chapter investigates the cyclical lending patterns of national development banks (NDBs), comparing their lending activity with that of public, foreign, and domestic private banks over the period ...
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This chapter investigates the cyclical lending patterns of national development banks (NDBs), comparing their lending activity with that of public, foreign, and domestic private banks over the period of 1995–2014. It finds robust evidence that national development and public retail-oriented banks have counteracted the slowdown in the lending activity of private banks during crises by significantly increasing their provision of loans. This is particularly important when considering productive lending to the corporate sector. NDBs’ size, governance structure, and financial conditions are crucial in ensuring that the countercyclical response is effective in mitigating the macroeconomic effects of financial turmoil. In addition, it is important that special and innovative credit lines are designed in line with the specific needs of companies in times of crisis.Less
This chapter investigates the cyclical lending patterns of national development banks (NDBs), comparing their lending activity with that of public, foreign, and domestic private banks over the period of 1995–2014. It finds robust evidence that national development and public retail-oriented banks have counteracted the slowdown in the lending activity of private banks during crises by significantly increasing their provision of loans. This is particularly important when considering productive lending to the corporate sector. NDBs’ size, governance structure, and financial conditions are crucial in ensuring that the countercyclical response is effective in mitigating the macroeconomic effects of financial turmoil. In addition, it is important that special and innovative credit lines are designed in line with the specific needs of companies in times of crisis.
Stephany Griffith-Jones, José Antonio Ocampo, Felipe Rezende, Alfredo Schclarek, and Michael Brei
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0001
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
In the wake of the global financial crisis, there is growing consensus that national development banks play a valuable role in development finance. This chapter looks first at the theoretical ...
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In the wake of the global financial crisis, there is growing consensus that national development banks play a valuable role in development finance. This chapter looks first at the theoretical background justifying the need for development banks. The chapter then describes empirically some of the key features of national development banks, including their lending and funding structure. Finally, it analyses in depth five main functions which national development banks perform: (i) providing countercyclical lending; (ii) promoting innovation and structural transformation; (iii) enhancing financial inclusion; (iv) supporting infrastructure investment; and (v) supporting the provision of public goods, and particularly combatting climate change.Less
In the wake of the global financial crisis, there is growing consensus that national development banks play a valuable role in development finance. This chapter looks first at the theoretical background justifying the need for development banks. The chapter then describes empirically some of the key features of national development banks, including their lending and funding structure. Finally, it analyses in depth five main functions which national development banks perform: (i) providing countercyclical lending; (ii) promoting innovation and structural transformation; (iii) enhancing financial inclusion; (iv) supporting infrastructure investment; and (v) supporting the provision of public goods, and particularly combatting climate change.
Felipe Carvalho de Rezende
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0012
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
Among the lessons that can be drawn from the global financial crisis is that private financial institutions have failed to promote the capital development of the affected economies, and to dampen ...
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Among the lessons that can be drawn from the global financial crisis is that private financial institutions have failed to promote the capital development of the affected economies, and to dampen financial fragility. This chapter analyses the macroeconomic role that development banks can play in this context, not only providing long-term funding necessary to promote economic development, but also fostering financial stability. The chapter discusses, in particular, the need for public financial institutions to provide support for infrastructure and sustainable development projects. It concludes that development banks play a strategic role by funding infrastructure projects in particular, and outlines the lessons for enhancing their role as catalysts for mitigating risks associated with such projects.Less
Among the lessons that can be drawn from the global financial crisis is that private financial institutions have failed to promote the capital development of the affected economies, and to dampen financial fragility. This chapter analyses the macroeconomic role that development banks can play in this context, not only providing long-term funding necessary to promote economic development, but also fostering financial stability. The chapter discusses, in particular, the need for public financial institutions to provide support for infrastructure and sustainable development projects. It concludes that development banks play a strategic role by funding infrastructure projects in particular, and outlines the lessons for enhancing their role as catalysts for mitigating risks associated with such projects.
Stephany Griffith-Jones, José Antonio Ocampo, and Paola Arias
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0013
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
Based on the seven case studies analysed in this volume, this chapter concludes that national development banks (NDBs) have been successful in many cases in supporting innovation and ...
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Based on the seven case studies analysed in this volume, this chapter concludes that national development banks (NDBs) have been successful in many cases in supporting innovation and entrepreneurship, key new sectors like renewable energy, and financial inclusion. They have developed new instruments, such as far greater use of guarantees, equity (including venture capital) and debt funds, and new instruments for financial inclusion. The context in which they operate is key to their success. Active countercyclical policies, low inflation, fairly low real interest rates, a well-functioning financial sector, and competitive exchange rates are crucial. They are also more effective if the country has a clear development strategy, linked to production sector strategies that foster innovative sectors. Under these conditions, the chapter argues that there is great need for a larger scale of NDB activity in Latin America and in developing countries in general.Less
Based on the seven case studies analysed in this volume, this chapter concludes that national development banks (NDBs) have been successful in many cases in supporting innovation and entrepreneurship, key new sectors like renewable energy, and financial inclusion. They have developed new instruments, such as far greater use of guarantees, equity (including venture capital) and debt funds, and new instruments for financial inclusion. The context in which they operate is key to their success. Active countercyclical policies, low inflation, fairly low real interest rates, a well-functioning financial sector, and competitive exchange rates are crucial. They are also more effective if the country has a clear development strategy, linked to production sector strategies that foster innovative sectors. Under these conditions, the chapter argues that there is great need for a larger scale of NDB activity in Latin America and in developing countries in general.
Stephany Griffith-Jones, María Luz Martínez Sola, and Javiera Petersen Muga
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0006
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
CORFO was one of the first national development banks in Latin America, and played a decisive role in Chile’s national development strategy. In recent decades, its relative scale has diminished ...
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CORFO was one of the first national development banks in Latin America, and played a decisive role in Chile’s national development strategy. In recent decades, its relative scale has diminished significantly. Its financial support currently represents only 1% of Chile’s GDP and has switched from giving credit directly to becoming a second-tier institution whose main instruments are not loans but guarantees. Its support for strategic sectors has been decisive to incentivize innovative, value-added activities, such as the Start-Up programme or renewable energy projects. Nonetheless, its limited scale severely reduces its potential ability to transform Chile’s economy or deploy a countercyclical role in a crisis scenario. This study suggests that CORFO could take advantage of Chile’s mature capital market, by raising additional funds through bond issues.Less
CORFO was one of the first national development banks in Latin America, and played a decisive role in Chile’s national development strategy. In recent decades, its relative scale has diminished significantly. Its financial support currently represents only 1% of Chile’s GDP and has switched from giving credit directly to becoming a second-tier institution whose main instruments are not loans but guarantees. Its support for strategic sectors has been decisive to incentivize innovative, value-added activities, such as the Start-Up programme or renewable energy projects. Nonetheless, its limited scale severely reduces its potential ability to transform Chile’s economy or deploy a countercyclical role in a crisis scenario. This study suggests that CORFO could take advantage of Chile’s mature capital market, by raising additional funds through bond issues.
José Antonio Ocampo and Paola Arias
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0007
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
The major feature of Colombia’s national development banks is that they constitute a system of multiple, specialized institutions, created at different times to promote sectors that were considered ...
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The major feature of Colombia’s national development banks is that they constitute a system of multiple, specialized institutions, created at different times to promote sectors that were considered strategic for the country’s development. This chapter analyses the characteristics of the system of national development banks in Colombia currently composed of four specialized institutions: FDN (for infrastructure), FINDETER (local development), BANCOLDEX (industry and foreign trade), and FINAGRO (agriculture). The chapter explores the history, current structure, and main features of the system. It also looks at how the system is managing three major market failures: infrastructure financing (the major case of market failure in long-term financing), financial inclusion, and the promotion of entrepreneurial growth.Less
The major feature of Colombia’s national development banks is that they constitute a system of multiple, specialized institutions, created at different times to promote sectors that were considered strategic for the country’s development. This chapter analyses the characteristics of the system of national development banks in Colombia currently composed of four specialized institutions: FDN (for infrastructure), FINDETER (local development), BANCOLDEX (industry and foreign trade), and FINAGRO (agriculture). The chapter explores the history, current structure, and main features of the system. It also looks at how the system is managing three major market failures: infrastructure financing (the major case of market failure in long-term financing), financial inclusion, and the promotion of entrepreneurial growth.
S. L. Shetty
- Published in print:
- 2010
- Published Online:
- October 2012
- ISBN:
- 9780198069096
- eISBN:
- 9780199080472
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198069096.003.0003
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter analyses the trends in the growth of institutional credit to agriculture in India. It shows that in the years following bank nationalization, the institutional credit to agriculture grew ...
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This chapter analyses the trends in the growth of institutional credit to agriculture in India. It shows that in the years following bank nationalization, the institutional credit to agriculture grew at a rate that was significantly faster than the growth of agricultural gross domestic product. Despite this phenomenal growth, the increasing credit needs of agriculture caused by commercialization were not fully met, particularly in the 1990s. As a result, small and marginal farmers became increasingly dependent on expensive informal sources. Credit flow to agriculture declined during the 1990s due to reforms in the financial sector. Although efforts to improve the flow of institutional credit to agriculture were revived in the late 1990s, better credit delivery and effective monitoring must be prioritized. Finally, the chapter examines the role of the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD) in realizing this goal.Less
This chapter analyses the trends in the growth of institutional credit to agriculture in India. It shows that in the years following bank nationalization, the institutional credit to agriculture grew at a rate that was significantly faster than the growth of agricultural gross domestic product. Despite this phenomenal growth, the increasing credit needs of agriculture caused by commercialization were not fully met, particularly in the 1990s. As a result, small and marginal farmers became increasingly dependent on expensive informal sources. Credit flow to agriculture declined during the 1990s due to reforms in the financial sector. Although efforts to improve the flow of institutional credit to agriculture were revived in the late 1990s, better credit delivery and effective monitoring must be prioritized. Finally, the chapter examines the role of the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD) in realizing this goal.
Stephany Griffith-Jones and José Antonio Ocampo (eds)
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.001.0001
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
The topic of national development banks was largely neglected in the academic literature for a long period, and was limited to a debate between admirers and detractors of these institutions. Since ...
More
The topic of national development banks was largely neglected in the academic literature for a long period, and was limited to a debate between admirers and detractors of these institutions. Since the 2007/9 financial crisis, interest in and support for these institutions have broadly increased, in developing, emerging, and developed countries alike. The key issues are understanding how such development banks work, what their main aims are, what instruments, incentives, and governance work better in general and in particular contexts, and what are their links with the private financial and corporate sector, as well as with broader government policies. This book aims to provide an in-depth study of several key cases of national development banks (in Brazil, Chile, China, Colombia, Mexico, Germany, and Peru) as well as horizontal issues such as their role in innovation and structural change, infrastructure financing, financial inclusion, environmental sustainability, the countercyclical role of development financing, and the regulatory rules that are best for these institutions. From both a research and a policymaking perspective, this book concludes that development banks can make a significant contribution to development. It analyses their roles, the link with broader economic policies, their governance, and the main instruments they use to perform their functions. The book has important policy implications for countries that have development banks, so they can improve them, but also for countries which do not yet have them, and can learn from best practice should they wish to establish them.Less
The topic of national development banks was largely neglected in the academic literature for a long period, and was limited to a debate between admirers and detractors of these institutions. Since the 2007/9 financial crisis, interest in and support for these institutions have broadly increased, in developing, emerging, and developed countries alike. The key issues are understanding how such development banks work, what their main aims are, what instruments, incentives, and governance work better in general and in particular contexts, and what are their links with the private financial and corporate sector, as well as with broader government policies. This book aims to provide an in-depth study of several key cases of national development banks (in Brazil, Chile, China, Colombia, Mexico, Germany, and Peru) as well as horizontal issues such as their role in innovation and structural change, infrastructure financing, financial inclusion, environmental sustainability, the countercyclical role of development financing, and the regulatory rules that are best for these institutions. From both a research and a policymaking perspective, this book concludes that development banks can make a significant contribution to development. It analyses their roles, the link with broader economic policies, their governance, and the main instruments they use to perform their functions. The book has important policy implications for countries that have development banks, so they can improve them, but also for countries which do not yet have them, and can learn from best practice should they wish to establish them.
Ulf Moslener, Matthias Thiemann, and Peter Volberding
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0003
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
This chapter argues that Germany’s national development bank, KfW, derives its legitimacy as an important policy actor through three characteristics: (i) it acts on the financial market with the ...
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This chapter argues that Germany’s national development bank, KfW, derives its legitimacy as an important policy actor through three characteristics: (i) it acts on the financial market with the government’s backing to pursue economic—rather than purely commercial—objectives; (ii) as a government agency, it has privileged access to officials and regulators; and (iii) it has extensive in-house technical and engineering expertise. As such, KfW can profoundly impact how these policies are implemented at five stages of the policy process: agenda setting, negotiation, implementation, monitoring, and enforcement. This conceptualization is applied to two illustrative case studies: facilitating Germany’s shift towards a green economy (the Energiewende) and coping with challenges of the 2008 global financial crisis.Less
This chapter argues that Germany’s national development bank, KfW, derives its legitimacy as an important policy actor through three characteristics: (i) it acts on the financial market with the government’s backing to pursue economic—rather than purely commercial—objectives; (ii) as a government agency, it has privileged access to officials and regulators; and (iii) it has extensive in-house technical and engineering expertise. As such, KfW can profoundly impact how these policies are implemented at five stages of the policy process: agenda setting, negotiation, implementation, monitoring, and enforcement. This conceptualization is applied to two illustrative case studies: facilitating Germany’s shift towards a green economy (the Energiewende) and coping with challenges of the 2008 global financial crisis.
Rogério Studart and Luma Ramos
- Published in print:
- 2018
- Published Online:
- November 2018
- ISBN:
- 9780198827948
- eISBN:
- 9780191866630
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198827948.003.0004
- Subject:
- Economics and Finance, Financial Economics, Development, Growth, and Environmental
Despite its recent socioeconomic achievements, Brazil faces daunting challenges related to its outdated and to a certain degree dysfunctional infrastructure. If Brazil aims to achieve sustained ...
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Despite its recent socioeconomic achievements, Brazil faces daunting challenges related to its outdated and to a certain degree dysfunctional infrastructure. If Brazil aims to achieve sustained inclusive growth in the future, and fulfil its potential as an emerging economy, it must find ways to fill its significant sustainable infrastructure and logistics gaps. This chapter analyses the recent role that Brazil’s national development bank, BNDES, has played in promoting infrastructure and logistics (I&L) investments. It argues that BNDES could, and should, play a critical role in developing a much-needed I&L investment financing architecture by fostering project development capacities, and financing, leveraging, and crowding-in private resource for the sector.Less
Despite its recent socioeconomic achievements, Brazil faces daunting challenges related to its outdated and to a certain degree dysfunctional infrastructure. If Brazil aims to achieve sustained inclusive growth in the future, and fulfil its potential as an emerging economy, it must find ways to fill its significant sustainable infrastructure and logistics gaps. This chapter analyses the recent role that Brazil’s national development bank, BNDES, has played in promoting infrastructure and logistics (I&L) investments. It argues that BNDES could, and should, play a critical role in developing a much-needed I&L investment financing architecture by fostering project development capacities, and financing, leveraging, and crowding-in private resource for the sector.
