11 November 2020

Funding Sources of National Development Banks

Access to large, long-term, and stable funding sources is a prerequisite for achieving the objectives of national development banks (NDBs). By systematically collecting data on the funding sources of NDBs worldwide, we are the first to answer the questions of what are the main types of funding sources available to NDBs, and what are the stylized facts of such funding sources. We find that public agencies and market actors are the two main sources of funding for NDBs where governments deploy both administrative measures and market-based means to mobilize funding for NDBs. In particular, NDBs can rely on government support to use market-based means to give full play to the leverage of the sovereign creditworthiness, transforming market funds into large long-term funds to advance development goals. In addition, direct and explicit funding support such as direct budgetary transfers from the government or official development assistance is also important for NDBs. Building upon the key characteristics of funding sources for NDBs worldwide, we finally propose ten research questions for future exploration from the perspective of New Structural Economics and encourage scholars who are interested in this area to conduct further research.

This Research Paper is published in the framework of the International Research Initiative on Public Development Banks working groups and released for the occasion of the 14th AFD International Research Conference on Development

It is part of the pilot research program “Realizing the Potential of Public Development Banks for Achieving Sustainable Development Goals”. This program was launched, along with the International Research Initiative on Public Development Banks (PDBs), by the Institute of New Structural Economics (INSE) at Peking University, and sponsored by the Agence française de développement (AFD), Ford Foundation and International Development Finance Club (IDFC).

Have a look on the key findings for a quick overview of the research results

See the video pitch