Smart Development Banks
Time：4:00pm - 5:30pm, June 4, 2019
Venue：Room 359S, Overseas Exchange Center, Peking University
(Professor of Economics and Pictet Chair in Finance and Development, Graduate Institute of International and Development Studies)
The conventional paradigm about development banks is that these institutions exist to target well-identified market failures. However, market failures are not directly observable and can only be ascertained with a suitable learning process. Hence, the question is how do the policymakers know what activities should be promoted, how do they learn about the obstacles to the creation of new activities? Rather than assuming that the government has arrived at the right list of market failures and uses development banks to close some well-identified market gaps, we suggest that development banks can be in charge of identifying these market failures through their loan-screening and lending activities to guide their operations and provide critical inputs for the design of productive development policies. In fact, they can also identify government failures that stand in the way of development and call for needed public inputs. This intelligence role of development banks is similar to the role that modern theories of financial intermediation assign to banks as institutions with a comparative advantage in producing and processing information. However, while private banks focus on information on private returns, development banks would potentially produce and organize information about social returns.
Ugo Panizza is Professor of Economics and Pictet Chair in Finance and Development at the Graduate Institute of International and Development Studies. He is also the Director of the Institute’s Centre for Finance and Development and Editor in Chief of International Development Policy. He is the Director of the International Centre for Monetary and Banking Studies (ICMB), Vice President and Fellow of CEPR, and Fellow of the Fondazione Einaudi. Before joining the Graduate Institute, he was Chief of the Debt and Finance Analysis Unit at the United Nations Conference on Trade and Development (UNCTAD) and a Senior Economist at the Inter-American Development Bank. He also worked at the World Bank and taught at the American University of Beirut and the University of Torino. Ugo holds an undergraduate degree from the University of Torino and a Ph. D. in Economics from the Johns Hopkins University (Baltimore).