The support of development banks in countries which are further developed regarding industry and infrastructure is frequently aimed at the financial assistance of SME’s (Small and Medium Enterprises) as they often serve as an economic pillar with regard to the middle class of the respective country. Additionally, development banks grant means to foster innovations, to encourage exports or to subsidize municipalities and regional projects such as the expansion of infrastructure and environmental protection etc. .
An own development bank is a very sustainable instrument in order to strategically set up and establish the support in a country.
Especially emerging countries have often realized the growing importance of development banks for their countries. Thus, even in European countries there are concrete plans to establish a development bank later this year hoping that a development bank stimulates the struggling economy by giving money to companies having difficulties obtaining commercial loans. Thereby, such banks direct their focus at SME’s as they constitute a high proportion of the countries’ economy and therefore employ many people.
But a final decision regarding the foundation of a development bank has not been made yet.
In many cases, development banks are owned by the government of the respective country and therefore the support through development banks goes in line with the interests of the current government.