Content introduction：

No. E2019006

 

The Maturity Lengthening Role of National Development Banks

Alfredo Schclarek   Jiajun Xu   Jianye Yan

May 2020​

 

Abstract:

This paper theoretically analyses why state-owned national development banks (NDBs) may be better at providing longer-term lending to firms in comparison with private-owned commercial banks (PCBs). The reason is that NDB bonds have more value than bonds issued by PCBs, thus allowing banks to better cope with interbank payments. NDB bonds have more value than those of PCBs because of state ownership, hence increasing recapitalization willingness and capacity. Another advantage is that NDBs finance themselves through bond issuance rather than deposit-creation and -taking, which increases the market liquidity of their bonds. Regarding the drawbacks of NDBs, monitoring quality is analyzed.

 

 

JEL classification: G01; G21; G28; H81; E51; E44 

 

Keywords: 

Bank lending; Maturity lengthening; Debt or collateral capacity; Asset-based leverage; Interbank markets; Recapitalization; Monitoring quality; Market liquidity; National development banks.

 

 

The series of New Structural Economics Working Papers aims to encourage academic scholars and students from all over the world to conduct academic research in the field of new structural economics. Excellent papers are selected irregularly and are offered academic suggestions and recommendation, but the published working papers are not intended to represent official communication from INSE.

The Present Paper was approved by the C3 Development Financing Group.