Development Finance Institutions (DFIs) are critical in supporting sustainable development. To date, there has been a limited level of analysis focused on their funding models. Key messages from this paper: 1) DFI funding models have material implications, whether they be linked to the instruments DFIs utilise to finance sustainable development, or to their ability to mobilise capital markets in support thereof. 2) Issuing bonds, including Green, Social and Sustainability (GSS) bonds, allows DFIs to leverage balance sheets through the mobilisation of private capital, offering investors access to the unique expertise of DFIs through familiar instruments. 3) There are advantages to diverging funding models, and risks associated with a uniform approach. Should they make use of the most appropriate funding model to take on specific and complementary segments of the demand for funding, individual DFIs would stand to add the benefits of specialisation to those of a complete product offering at the sector level.
The Funding Models of Bilateral Development Finance Institutions
A comparative analysis of Proparco, FMO and British International Investments
Working paper
OECD Development Perspectives
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