A development bank provides capital for the investment needs of a country or a group of countries. Development banks operate on a national or regional scale. Financing is either medium or long-term, and geared towards the development needs of its area of concern. Financing also comes with technical assistance, if necessary.
The number of development banks worldwide has risen since the 1950s. An example is the Asian Development Bank, established in 1966. The ADB covers several countries from different continents. However, as the name suggests, it is largely composed of nations from Asia and the Pacific region.
The ADB was set up mainly to address the problem of poverty in the Asia-Pacific region. It falls under the classification of a regional development bank.
In order to perform its intended function, the ADB finances projects for the long-term development of its member countries. Capital is supplied, for instance, for the construction of infrastructure. Technical assistance may also be provided.
The ADB has its own roster of experts in various industries, such as agriculture and engineering. Their help are enlisted in order to provide additional support for specific projects, in order to ensure that these become successful and produce the desired outcome. Aside from economic growth, the ADB may also help its developing member countries in areas such as disaster management and improvement of the standard of living.
ADB funding is supplied by developed countries. Other sources are loan interests and contributions from the bank’s members.
Other examples of development banks are the African Development Bank and the World Bank.