The Rise of Promotional / Development Banks in Contemporary Europe: Potentials and Pitfalls

Project Start:04/2018
Status:Ongoing
Researchers:Daniel Mertens, Matthias Thiemann
Category: Financial Intermediation
Funded by:LOEWE

We are interested in, but not confined to, the following questions: 1) Which factors facilitate the growth of development banks? Is it best to understand them as tools for governments and policy-makers? Or are they better understood as financial institutions with their own or a ‘financial sector’ agenda? What is the impact of the use of blended finance instruments and PPPs on this positioning? (2) Which cleavages and conflicts do these ‘borderline actors’ face, absorb or mitigate in the current context characterized by neoliberalism and austerity, or protectionism and authoritarianism? To what extent are they sites of political and distributional conflict between member states, the EU administration and rating agencies? (3) What does the growth of these banks mean for the evolution of capacities at the European level to direct investment and development, to key national and EU objectives? How do they relate to other actors and mechanisms such as national governments, European Commission, Institutions like the AIIB? How do they figure in the construction of European integration long-term and post-crisis? What are the concrete instances and mechanisms of collaboration and possible hierarchies when it comes to development banks in the European core and those in the periphery? (4) To what extent are state-owned development banks contested institutions regarding their potential for socioeconomic and environmental transformation? How much are they constrained by capital market actors, or narrow political considerations? Do they reflect -and help fulfill- sufficiently EU and national objectives, e.g. in sustainable development? Are they sufficiently accountable, e.g. to Parliaments, and transparent? How can development banks be improved, from these perspectives? What lessons can be learned from well-functioning development banks for newer or less successful ones? Are they carrying a trade-off between technocratic impact and democratic accountability, between economic growth and potentially conflictive distributional consequences?

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