Development finance institution (DFI), also known as aDevelopment bank, is afinancial institution that providesrisk capital foreconomic development projects on a non-commercial basis.
DFIs are often established and owned by governments ornonprofit organizations to finance projects that would otherwise not be able to get financing from commercial lenders.
They are often structured as acompany that provides loans for projects that a government or nonprofit wants to encourage for non commercial reasons. They can be at a local, national or international level. DFIs includemultilateral development banks,national development banks, bilateral development banks,microfinance institutions,community development financial institution andrevolving loan funds.[1]
DFIs can play a crucial role in financing private and public sector investments in developing countries, in the form of higher risk loans, equity positions, and guarantees.[2]
DFIs often provide finance to the private sector for investments that promote development and to help companies to invest, especially in countries with various restrictions on the market.[2]
As of November 2020[update], development banks and private finance had not reached the US$100 billion per year investment ofclimate financing stipulated in the UN climate negotiations for 2020.[3] However, in the face of theCOVID-19 pandemic's economic downturn, 450 development banks pledged to fund a "Green recovery" in developing countries.[3]
Development banks include:
| International | |
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| National | |
| Other | |
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