Development Banks

This first publication from the International Bank's Economic Development Institute sets a high standard for any Institute studies that may be released in the future. Within the brief compass of 85 pages the author has provided a valuable text on development banks, defined in this case as financial institutions "devoted primarily to stimulating the private sector of the economy." Most of the remaining 43 pages of the 128-page book consist of summary descriptions of the organization and operations of development banks in India, Mexico, and Turkey. The principal sections of the book are two short background chapters on "The Process of Investment" and "Some Experience of Advanced Countries," and a lengthier chapter concerning "Problems of Formation and Operation" of development banks. The "investment" chapter comprises a deft review of the more important institutional, legal, and traditional obstacles to saving and to productive investment that are encountered in underdeveloped countrie. The "experience" chapter, which draws heavily, as the author generously acknowledges, on the recent spate of historical studies of developmental finance, outlines with verve some significant institutional developments during the nineteenth and twentieth centuries in the supplying of medium- and long-term credit in the United States and several European countries. The author's main contribution, however, is contained in the final chapter, where he presents an informed and informative technical discussion, written in an easily digested style, concerning the possible scope and nature of development bank activities, the broad range of possible relationships to the government and "clients," their financing and staffing problems, and the question of whether or not a development bank ought to strive for profits.