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Financial Dynamics

  • Ihsan Ugur Delikanli
  • Todor Dimitrov
  • Roena Agolli
Chapter

Abstract

This chapter outlines the importance and specifics of Multilateral Development Bank (MDB) capital formation and use, revealing disparities and inefficiencies, to inspire improvements. It offers a balance between comprehensibility and complexity of this rather technical topic. A wealth of data and analysis, covering a ten-year period, reveal major disparities among the three groups of MDBs—Global, Regional, and Sub-regional. Beginning with the design of capital structure, the chapter expands into several key aspects, including the importance of financial leverage, credit rating implications, implicit subsidies, and catalyzing private investments. The authors highlight striking differences among Global, Regional, and Sub-regional institutions. By dissecting multiple financial layers, the analysis reveals a legacy of outdated approaches, as well as the controversial treatment of MDBs by credit rating agencies. The conclusion calls for a rigorous assessment and reshaping of MDBs’ approach to finance, through forward-looking innovation, outlined further in Chap.  7.

List of Abbreviations

Global

IBRD

International Bank for Reconstruction and Development

IDA

International Development Association

IFAD

International Fund for Agricultural Development

IFC

International Finance Corporation

Regional

AfDB

African Development Bank

AIIB

Asian Infrastructure Investment Bank

AsDB

Asian Development Bank

CEDB

Council of Europe Development Bank

EBRD

European Bank for Reconstruction and Development

EIB

European Investment Bank

IDB

Inter-American Development Bank

IsDB

Islamic Development Bank

NDB

New Development Bank (formerly referred to as the BRICS Development Bank)

Sub-regional

BADEA

Arab Bank for Economic Development in Africa

BSTDB

Black Sea Trade and Development Bank

CABEI

Central American Bank for Economic Integration

CAF

Development Bank of Latin America (formerly referred to as the Corporación Andina de Fomento)

CDB

Caribbean Development Bank

EADB

East African Development Bank

EDB

Eurasian Development Bank

ETDB

ECO Trade and Development Bank (also referred to as ECO Bank, where ECO stands for Economic Cooperation Organization)

IIB

International Investment Bank

NIB

Nordic Investment Bank

PTA

Eastern and Southern African Trade and Development Bank or the Preferential Trade Area Bank

WADB

West African Development Bank

References

  1. BCBS, Basel Committee on Banking Supervision. 2004, June. Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework. https://www.bis.org/publ/bcbs107.pdf.
  2. ———. 2011, June. Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems. www.bis.org/publ/bcbs189.pdf.
  3. ———. 2014. Basel III Leverage Ratio Framework and Disclosure Requirements. Basel (Updated 2017).Google Scholar
  4. ———. 2016, April. Consultative Document Revisions to the Basel III Leverage Ratio Framework. https://www.bis.org/bcbs/publ/d365.pdf.
  5. ———. 2017, December. Basel III Finalising Post-Crisis Reforms.Google Scholar
  6. Buiter, Willem, and Steven Fries. 2002. What Should the Multilateral Development Banks Do. London: EBRD. http://www.ebrd.com/downloads/research/economics/workingpapers/wp0074.pdf.Google Scholar
  7. Development Committee (World Bank and IMF). 2015. From Billions to Trillions: Transforming Development Finance Post-2015/Financing for Development: Multilateral Development Finance. Washington, DC: The World Bank. http://siteresources.worldbank.org/DEVCOMMINT/Documentation/23659446/DC2015-0002(E)FinancingforDevelopment.pdf.Google Scholar
  8. Moody’s. 2018. Supranationals – Global, Basel III Risk-Weight Changes Benefit Single A-Rated Multilateral Development Banks.Google Scholar
  9. The World Bank. 2015. Development Banks Working Together to Optimize Balance Sheets. Washington, DC: Press Release. http://www.worldbank.org/en/news/press-release/2015/12/22/development-banks-optimize-balance-sheets.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Ihsan Ugur Delikanli
    • 1
  • Todor Dimitrov
    • 2
  • Roena Agolli
    • 2
  1. 1.IstanbulTurkey
  2. 2.ThessalonikiGreece

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