Development Financial Institutions (DFIs) are critical intermediaries for channelling long-term finance required for infrastructure and key manufacturing projects for realising higher economic growth.


Development Financial Institutions (DFIs) were established with the Government support for underwriting their losses as also the commitment for making available low cost resources for lending at a lower rate of interest than that demanded by the market for risky projects.

Frequently Asked Questions

What are the 4 types of financial institutions?

The most common types of financial institutions are commercial banks, investment banks, insurance companies, and brokerage firms.

Why are the financial institutions also known as development banks?

Financial institutions are also known as development banks because these institutions provide long and medium-term loans for the development and growth of industry.

Why is development finance important in Africa?

Development Finance Institutions (DFIs) have long played an important role in financing Africa’s private sector. With patient capital and a high-risk tolerance, they hold Africa’s largest portfolio, directing significant resources to enable the continent’s banks and private investors to finance corporate growth.

What are the sources of development finance?

A number of possible sources have been recently been proposed. These include the Tobin Tax, the International Finance Facility, a global lottery, a global premium bond, development-focused special drawing rights and global environment taxes (Atkinson 2004) .

What is the purpose of development banks?

Its primary objective is to provide banking services principally to cater to the medium and long-term needs of agricultural and industrial enterprises with emphasis on small and medium-scale industries.

What is the difference between bank and financial institutions?

The main difference between banks and non-banking other financial institutions is that the latter cannot accept deposits into savings and demand deposit accounts, whereas these are the core business for banks.

What are the two main types of financial institutions?

Financial institutions can be divided into two main groups: depository institutions and nondepository institutions. Depository institutions include commercial banks, thrift institutions, and credit unions. Nondepository institutions include insurance companies, pension funds, brokerage firms, and finance companies.

How development financial institutions contribute towards the growth of economy?

Businesses and industries are financed by the financial systems which lead to growth in employment and in turn increase economic activity and domestic trade. Financial intermediaries help improve investment efficiency, leading to higher economic growth.

What is the role of financial institutions?

The primary role of financial institutions is to provide liquidity to the economy and permit a higher level of economic activity than would otherwise be possible. According to the Brookings Institute, banks accomplish this in three main ways: offering credit, managing markets and pooling risk among consumers.

What are the functions of financial institutions?

Financial institutions are entities that facilitate financial transactions and act as intermediaries in financial operations. There are various functions of financial institutions, including banking services, capital formation, monetary supply regulation, pension fund services, and the economic growth of a nation.

What is financial institutions and its types?

Central banks, commercial banks, investment entities, credit unions, thrift institutions, insurance companies, etc., are some of the widely available financial institution types. They also offer consultation services to consumers who seek advice on the pros and cons of making a particular investment.

What is the role of international financial institutions in developing and least developed countries?

International Finance Institutions (IFIs) play a significant role in supporting the private sector in developing countries by encouraging entrepreneurial initiatives that help developing countries achieve sustainable growth.

What are the different development banks?

NOTE: There are two types of development banks namely; community development banks and regional development banks.

What is the role of financial institutions in entrepreneurship development?

Financial institutions help small and medium-scale enterprises set up themselves in their initial business days. They provide long-term as well as short-term funds to these companies. The long-term fund helps them form capital, and short-term funds fulfill their day-to-day working capital needs.

How do financial institutions help businesses?

Your bank can increase profits from business accounts by improving your processes in services such as loans, and by offering small businesses all the banking services they need. You’ll also save time for the customer if they don’t have to go elsewhere. This will make the relationship more attractive for both parties.

Are all financial institutions banking institutions?

So financial institute provide financial service to customers but they are not authorized to collect customer’s deposits and provide deposit accounts, whereas the banks are authorized to do both. So, Banking is a financial institution but all financial institutions are not bank.