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 By dissecting multiple financial layers, the analysis reveals a legacy of outdated approaches, as well as the controversial treatment of MDBs by credit rating agencies.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
International Bank for Reconstruction and Development
International Development Association
International Fund for Agricultural Development
International Finance Corporation
African Development Bank
Asian Infrastructure Investment Bank
Asian Development Bank
Council of Europe Development Bank
European Bank for Reconstruction and Development
European Investment Bank
Inter-American Development Bank
Islamic Development Bank
New Development Bank (formerly referred to as the BRICS Development Bank)
Arab Bank for Economic Development in Africa
Black Sea Trade and Development Bank
Central American Bank for Economic Integration
Development Bank of Latin America (formerly referred to as the Corporación Andina de Fomento)
Caribbean Development Bank
East African Development Bank
Eurasian Development Bank
ECO Trade and Development Bank (also referred to as ECO Bank, where ECO stands for Economic Cooperation Organization)
International Investment Bank
Nordic Investment Bank
Eastern and Southern African Trade and Development Bank or the Preferential Trade Area Bank
West African Development Bank
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