Funding Economic Development and the Role of National Development Banks-The Case of Cyprus

Helen Kavvadia and Savvakis Savvides

No 2019-09, Development Discussion Papers from JDI Executive Programs

Abstract: The paper draws on previous research on the role of Multilateral Development Banks (MDBs), Regional Development Banks (RDBs) and National Development Banks (NDBs). It examines the role of the Cyprus Development Bank (CDB), prior its privatisation in 2008, in the economic development of the country and, specifically, its intermediation of international finance from multilateral and regional development banks. Currently, this function is undertaken by the commercial banks, which are however limited by a balance sheet fatigue, resulting from the excessive levels of private debt, as shown in this paper. Moreover, the commercial banks lack necessary elements in successfully executing this key role. They do not have the professional competence as well as the discipline and culture for executing such a highly demanding role in the economy. Last but not least, and judging from the experience of the CDB it is imperative to have a totally independent and competent financing institution, which will lead by example. Further to the analysis of the current macroeconomic and institutional context in Cyprus, there is a void of institutional capacity to fund projects and offer valuable advice to state and private decision-making bodies on decisive development projects. This paper recommends the establishment of an NDB or a National Development Finance Agency (NDFA), and proposes an appropriate model.

Keywords: National Development Banks; International Finance; Regional Development Banks; Multilateral Development Banks (search for similar items in EconPapers)
JEL-codes: F45 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-09
New Economics Papers: this item is included in nep-fdg and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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