Multilateral Development Banks Research Articles

The COVID-19 Response of BRICS and Multilateral Development Banks

This article conducts an analysis of the BRICS member countries in terms of their national and international institutions, with a special emphasis on how these institutions affect the stability of the global financial system and the promotion of development. To this end, the work was guided by the attributions of national central banks and the role played by the G20 in maintaining international financial stabilization. Additionally, the analysis examines the activities of national development banks and their institutions established within the BRICS nations, such as the Contingent Reserve Arrangement and the New Development Bank. The descriptive method was used to interpret the dynamics of international political and legal relations. The article concludes by recognizing the decreasing significance of multilateral solutions and highlighting the need for the national central and development banks of the BRICS countries to engage in communication with international organizations of financial cooperation.

Sustainable future bonds: Boosting multilateral development banks lending and improving the global reserve system

AbstractMultilateral development banks (MDBs) are crucial players to finance a greener, more socially inclusive and sustainable future, given their unique financial model that provides low‐cost and long‐term investments in areas aligned with the Sustainable Development Goals (SDGs) and the Paris Climate commitments. To fulfill their potential, MDBs need a stepwise increase in financing, which has been a challenge given the reluctance of their shareholders to provide additional paid‐in capital. We present a novel proposal for MDB hybrid capital that is designed to boost MDB funding while supplying the international reserve system with a new safe asset, the Sustainable Future Bonds (SFB). Under the SFB proposal, a tiny fraction of the global foreign reserves would be rechanneled to MDBs, and given liquidity enhanced mechanisms, SFB would serve as an additional safe reserve asset for central banks' portfolios. As our conservative estimation shows, by deploying just 0.5 percent of global foreign reserves for the Sustainable Future Bonds, at least $45 billion per year in fresh capital to MDBs would be mobilized. At that pace, by 2030, MDBs will have $360 billion in capital injections, which, depending on their leverage capacity, could result in new lending from $1.6 trillion to $1.9 trillion.

Water supply and sanitation projects in the last decade: project characteristics, multilateral development bank performance, and quality of results

Abstract To ensure universal access to water supply and sanitation (WSS) services that are safe, reliable, sustainable, and affordable, it is important to attract the right types of financing and identify the aspects that could be hindering the success of WSS projects. In this study, 62 completed World Bank WSS projects were analyzed to understand the relationship between project characteristics, bank performance, and quality of results. The methodological approach included a systematic quantitative review and comparative, statistical, and regression analyses, considering important aspects of the projects. The existence of correlations and interactions between project results, bank performance, and key aspects of the projects (such as type of project, initial and final risk assessments, commitments and disbursements, and other characteristics) was observed. This study highlights the importance of rating and mitigating WSS project risks (especially the environmental, social, political, and governance risks) and the importance of development bank financing. The applied methodology could be used by both financiers and borrowers.

Greenfield project finance loan maturity and the role of multilateral development banks in developing countries

This paper is intended to provide empirical evidence for the financial additionality of multilateral development banks (MDBs) in private sector infrastructure projects. To validate MDBs’ financial additionality, this study uses IJGlobal’s project finance database to examine whether the loan tenor of MDBs’ project finance loans is significantly longer than the average loan tenor extended by commercial banks, using ordinary least squares (OLS) and Poisson Pseudo Maximum Likelihood (PPML) estimations. The result of the empirical analysis shows that project finance loans involving MDBs have significantly longer loan maturity than average loans in lower-middle-income and upper-middle-income countries, while projects in low-income countries and Sub-Saharan Africa do not have such a tendency. Furthermore, in host countries where government effectiveness is underdeveloped, the coefficient of project finance loans provided by MDBs is negative with statistical significance. As a policy implication, these findings indicate that for MDBs to ascertain financial additionality in countries where government effectiveness is weak, additional measures such as capacity building of the host government and additional financial intervention are needed.

The support of Multilateral Development Banks to renewable energy projects in developing countries

Multilateral Development Banks (MDBs) are extensively involved in the Paris Climate Agreement and play a key role in climate finance. However, the amounts recently channeled to carbon-based projects may raise doubts about this involvement. This empirical approach seeks to explore whether MDB participation actually favors renewable energy projects in developing countries, aligning with their commitment to this Agreement. An empirical analysis is conducted to explore the determinants of MDBs’ participation in energy infrastructure projects developed in 64 countries using data from 2011 to 2018 obtained from the World Bank’s Private Participation in Infrastructure Database. The results reveal that MDBs’ participation is higher in renewable energy projects, confirming their commitment to clean energy; however, this is not confirmed by the amount of financial support provided.

Assessing the Accountability Mechanism of Multilateral Development Banks Against Access to Justice: The Case of the World Bank

Assessing the Accountability Mechanism of Multilateral Development Banks Against Access to Justice: The Case of the World Bank

Multilateral development banks – Strategic actors in the new economy?

The paper addresses the role of multilateral development banks in the new economic paradigm, built in the context of multiple crises with global impact. Multilateral development banks, in their capacity as promoters of governments’ policies are “invited/expected” to play a key role in the new geopolitical architecture, holding a competitive advantage in the provision of finance, which is linked to the design and implementation of structural reforms and programs of strengthening institutions controlled by governments. The paper aims to represent a signal regarding the strategic component and the synergies that multilateral development banks can determine. It highlights the tools that multilateral development banks have for selecting, monitoring and supporting programs and projects with regional and global impact. The paper describes the state of knowledge and reviews the specialised literature in the field of multilateral development banks, describes intervention channels and financing products of multilateral development banks, and discusses their impact on a European and regional level. The concluding remarks address the strategic role of multilateral development banks, their contribution to sustainable development goals and outline directions for future research.

Attaining Sustainable Development Goals through Financial Inclusion: Exploring Collaborative Approaches to Fintech Adoption in Developing Economies

This study proposes a multi-stakeholder framework to enhance fintech use in Africa, aiming to improve financial inclusion and achieve the Sustainable Development Goals. This article analyzes past research and frameworks built to help stakeholders in developing nations adopt fintech, some of which have been tested in African states with limited success. The study recommends prioritizing national ownership, creating an enabling environment for private sector investment, partnering with multilateral development banks and other stakeholders, fostering innovation and digital literacy, and focusing on cost-effective, non-government-guaranteed financing. In accordance with the G20’s High-Level Principles for Digital Financial Inclusion, a country-specific strategy can boost financial technology and digital financial services uptake in Africa. Each government may build a legislative climate that supports innovation and competition, strengthens its digital infrastructure, increases digital literacy and awareness, and collaborates with private sector stakeholders to extend financial inclusion. Partnerships with businesses, international organizations, and other nations can help The Better Than Cash Alliance (TBTCA) promote fintech adoption. Countries can use fintech companies to build and implement national digital payment infrastructure by joining the Alliance. Finally, the mSTAR program advises cooperating with USAID to promote marginalized people, incorporate digital financial services, increase public–private engagement, and educate and train policymakers, practitioners, and technologists. These ideas can help African governments adopt fintech products faster and enhance financial inclusion.

Bankruptcy and international intervention: The case of Addiko bank

AbstractIn 2014, the Austrian bank Hypo Group Alpe Adria was purchased by the American banking group Advent International, and the European Bank for Reconstruction and Development (EBRD) and re‐branded as Addiko bank. In this paper, I explore how this purchase of Addiko Bank by an international multilateral development bank (MDB) affected exporting firms in Croatia. Using a difference‐in‐differences specification to investigate whether there was a meaningful effect of this turnover on firm performance, I find that the turnover of Addiko bank led to a $160,000 decrease in loans taken out by firms. However, this effect seems to occur immediately after the turnover, and vanishes over time. This effect is seen among domestically‐owned firms and non‐manufacturing firms, but not multinational affiliates and manufacturing firms. Additionally, I find no effect of this turnover on firm revenues. These results indicate that after an initial period of turmoil, the intervention by EBRD and Advent International had no lasting negative effects on firms in Croatia. The intervention by a MDB can help reform a financial sector and will not necessarily lead to detrimental effects at the micro‐level.

Accountability enablers? The role of transnational activism in the use of the multilateral development bank grievance mechanisms

Abstract The proliferation of concerns over the transparency, accountability, and democracy of international organizations has contributed to an increase in accountability mechanisms to hold global governors to account, by both state and non-state actors. Much of the scholarly focus on this subject has been on how levers of accountability can improve global governance for Member States and actors seeking to improve decision-making, and thus outputs. This article instead examines how individuals and communities, or neglected publics, are using accountability mechanisms designed to provide them with recourse for environmental and social harm. It probes the use of the grievance mechanisms for the multilateral development banks to examine what kinds of actors use them (e.g., international nongovernmental organizations, nongovernmental organizations, or project-affected people [PAP]) and to what effect. To explore these questions, we analyze 500 complaints submitted to the grievance mechanisms of the World Bank Group; the Asian, African, and Inter-American Development Banks; and the European Bank for Reconstruction and Development. The results demonstrate that claims for recourse come from a range of primarily local actors, but that PAP in developing countries will more often achieve positive outcomes from the grievance mechanism process if they receive assistance from international and national nongovernmental organizations. These findings therefore demonstrate that transnational activists can fulfill a facilitating role as “accountability enablers” and that domestic representatives are especially effective in problem-solving processes, while international representatives are especially effective in compliance processes.

Mobilizing Private Investment in Climate Solutions: De-risking Strategies of Multilateral Development Banks

This paper discusses various ways through which Multinational Development Banks (MDBs) can mobilize private capital. The paper provides insights into innovative de-risking mechanisms and structures, to catalyze private finance for climate investments. To understand how MDBs can become 'mobilizers', it teases out the specific features from these mechanisms that could be replicated and scaled under certain conditions..

International legal nature of multilateral development banks

The article examines the theoretical foundations of the international legal nature of multilateral development banks. The methodological basis of the study was a complex systematic analysis of legal phenomena, as well as private scientific methods of knowledge: formal-legal, historicallegal, and comparative-legal. It indicated that multilateral development banks are international organizations that meet all the characteristics of subjects of international law – they have their own will, competence, and responsibility. Multilateral development banks are international organizations of a special type that combine public and private foundations in terms of competence. It noted that multilateral development banks create conditions for cooperation between states in matters of financing the economy. Development banks created as international organizations based on multilateral agreements for joint management of international settlements in the field of financial cooperation. Multilateral development banks as subjects of international law are capable of responding quickly to changes in the world economy. The purpose, tasks, functional features of multilateral development banks constantly being transformed, which corresponds to modern trends in the development of international legal and economic relations. It indicated that multilateral development banks, as international intergovernmental organizations, have their own legal personality and do not fall under the jurisdiction of the national states on whose territory the headquarters are located. Development banks have international immunities and privileges that are functional in nature. A feature of the legal status of multilateral development banks, as subjects of international public law, is the combination of public and private functions due to the private law and public-law nature of their activities. This manifested in the fact that the financial operations of international multilateral development banks are similar to market financial operations, but credit agreements are international contracts concluded with states. A special aspect of the legal activity of development banks is the influence on social and economic reforms in member states by financing development programs.

More debtfare than healthcare: business as usual in the Multilateral Development Banks’ COVID-19 response in India

Multilateral Development Banks (MDBs) have been a vital source of funds for the global South in responding to the COVID-19 pandemic, particularly in the healthcare sector. Prior to the pandemic, the big MDBs’ approach to healthcare reflected the post-Washington Consensus, that is a largely neoliberal agenda perpetuating the expansion of private healthcare markets through financialization mechanisms, though with some emphasis on a minimal level of universal healthcare. We studied the MDBs’ approaches to healthcare in India to evaluate whether the pandemic resulted in: (a) a re-evaluation of their healthcare models to ensure they were fit for a pandemic; (b) a business-as-usual approach; or (c) a disaster capitalism response exploiting the current socio-economic milieu to further neoliberalization processes. We found that the MDBs adopted an inadequate business-as-usual approach that is intensifying the financialization of healthcare in projects using interventions at the micro through to the macro level. This path dependent approach emphasizing multi-scalar financialization has long-term implications for human well-being. Further, we contend that MDB lending is deepening ‘debtfare’ through its healthcare and other support, a term Susanne Soederberg (2014, p. 3) conceived to describe the way neoliberal states ‘mediate, normalise and discipline the monetised relations that inhabit the poverty industry.’

Chris Humphrey. 2022. Financing the Future: Multilateral Development Banks in the Changing World Order of the 21st Century. (Oxford: Oxford University Press). Laura Francesca Peitz. 2023. The Dual Nature of Multilateral Development Banks: Balancing Development and Financial Logics. (Cambridge, UK: Cambridge University Press)

Chris Humphrey. 2022. Financing the Future: Multilateral Development Banks in the Changing World Order of the 21st Century. (Oxford: Oxford University Press). Laura Francesca Peitz. 2023. The Dual Nature of Multilateral Development Banks: Balancing Development and Financial Logics. (Cambridge, UK: Cambridge University Press)

Do customer knowledge and customer trust in IDIC affect bank customer retention? Evidence from Indonesia

Purpose — The primary focus of this research was to examine the impact of customer knowledge and customer trust in Indonesia Deposit Insurance Corporation (IDIC) on the retention of bank customers in Indonesia.Method — The study employed a cross-sectional design and quantitative survey study. Questionnaires were distributed randomly to respondents via social media. 141 respondents from bank customers in Indonesia have been analyzed. Hypothesis testing is done by multiple linear regression analysis with structural equation modeling and SmartPLS as a statistical tool.Result — The results show that the average bank customer in Indonesia has sufficient knowledge about the role, function, task, and performance of IDIC. However, knowledge needs to be improved because some customers do not understand it well. The results provide empirical evidence that customer knowledge and customer trust in IDIC have positive influence on bank customer retention.Contribution — There is a new concept with the integration of two theories that will benefit future research. The findings contribute to addressing research gaps that have inconsistent results. The findings also contribute to improving customer knowledge and customer trust as a solution to the impact of the COVID-19 pandemic and the global financial crisis. This study supports the G20 in strengthening financial safety nets, where multilateral development banks are encouraged to strengthen their financing systems to face global economic challenges.

Recursos externos para a Administração Pública: a contribuição dos novos bancos multilaterais de desenvolvimento

Multilateral development banks are international organizations and, therefore, subjects of Public International Law, aimed at promoting financial cooperation through loans and donations to infrastructure projects, acquisition of goods and services for the Public Administration. The creation of the first banks occurred at the end of World War II, in the context of post-war reconstruction. Brazil has a constitutional and legal framework that allows the use of external resources from multilateral banks, as well as the waiver of domestic legislation for the application of external rules, subject to constitutional and procedural requirements. In the first decades of the 21st century, due to the economic growth of emerging countries and the need for greater representation of their decisions in international organizations, new multilateral banks have been created. These banks are characterized by their more flexible rules, greater possibility to make use of national procurement and contracting rules, use of local currency, and fewer conditionalities. Faced with an international context marked by the COVID-19 pandemic, the war in Ukraine, and high inflation, foreign resources qualify as an alternative to contribute to national public policies, and Brazilian institutions need to qualify themselves to be able to request funding for projects of public interest.

Who benefits from the procurement financed by Multilateral Development Banks?

AbstractWe use a gravity model to inquire about the factors that influence the amount of public procurement awarded by developing countries with funding from Multilateral Development Banks (MDBs), based on 169 000 contracts. We reach four main conclusions. First, procurement disproportionately benefits firms of low‐ and middle‐income countries and not those of MDBs' larger shareholders. Second, firms of upper‐middle‐income countries can compete successfully with those of developed countries. These two conclusions are in line with MDBs' development mandate. However, we also find that certain MDBs favour domestic firms and that having good diplomatic relations matters when awarding contracts.

A Relationship between Climate Finance and Climate Risk: Evidence from the South Asian Region

South Asia is the most vulnerable region in the context of global warming, climate change, and climate risk. Climate finance is the most useful tool for combating climate challenges worldwide. The study explores the present picture of climate finance in South Asian (SA) countries. The study uses multilateral development bank (MDB), Green Climate Fund (GCF), and Germanwatch supplied data from 2011 to 2021. Under the theoretical lens of institutional capacity development, the study attempts to correlate climate finance and climate risk. The study indicates an increasing trend of MBDs’ and the GCF’s climate finance in many countries worldwide. The study finds that MDBs’ total global climate finance is USD 446,977 million, while the SA region has received USD 59,301 million since 2011. It also reports that MDBs provide 77% and 23% of the money to the mitigation and adaptation areas. Moreover, the study reports that, after COVID-19, MDBs substantially increased the amount of global climate financing, but this increase was not seen in the SA region. Our climate risk data indicate that most of the SA countries are highly long-term climate risky and lose, on average, 0.378% of GDP. The correlation matrix finds a negative and significant correlation between climate finance and long-term and yearly climate risk. The study identifies that the region’s climate financing flow of money is not rationally distributed based on the short-run and long-run climate risks. The study presumes that more climate finance would be the most effective mechanism to mitigate climate risk. Therefore, SA region leadership drastically requires a holistic framework to address the prevailing climate problems and to ensure regional coordination and cooperation toward climate finance and policies. The research findings have significant implications for climate policy and climate finance.

The multilateral development banks: Conceptualising and operationalising gender

Multilateral development bank (MDB) engagement with gender has always been controversial in review and uneven in practice. This article adopts a mixed qualitative/quantitative document analysis of 95 documents produced by 11 MDBs between 1979 and 2021. The primary objectives of the article are to evaluate how gender has been conceptualised and operationalised by the MDBs over time. Based upon its analysis, this article divides MDB gender engagement into three eras and observes the MDBs as a network of aligned organisations operating in a common institutional field. It concludes that while the MDBs have since the late-2000s expanded their operationalisation of gender greatly, this operational growth has paralleled a concerning conceptual narrowing that has disbanded initiatives to alleviate poverty, reduce gendered inequalities, and promote wellbeing in favour of making better entrepreneurial economic units of women and girls for the narrow purpose of enhancing national economic growth.

Rebalancing climate finance: Analysing multilateral development banks' allocation practices

This paper provides novel evidence on the climate financing practices of Multilateral Development Banks (MDBs) and their long-term social and climate consequences. We find that the majority of MDB climate finance is for mitigation projects, concentrated in a few relatively wealthy countries, and positively correlates with countries' greenhouse gas emissions but not with their vulnerability to climate risks. A transition towards a more equal allocation between mitigation and adaptation can substantially reduce global climate vulnerability for an additional 1.9 billion people without significant changes in the annualized growth rate of emissions. Our results contribute to the discussion on global equity in climate finance allocation and the societal impact of climate change.