Development Finance Institutions

This course provides an in-depth exploration of development finance institutions (DFIs) from their historical roots to their modern role in global finance with a focus on their ability to catalyze sustainable development and mobilize private finance. The course covers the history and landscape of development finance, including the origins, evolution, and role of DFIs within the broader development finance architecture. Students explore commonalities and differences between national, bilateral, and multilateral institutions. Students learn about the organizational structure and investment processes of DFIs, including how they assess and manage risks, and the mechanisms they use to achieve and measure impact. Students analyze real-world examples of how DFIs originate, assess, and structure deals. Then, we cover the role of financing in development and climate by exploring how DFIs support economic development, infrastructure, and climate finance initiatives, including energy transition financing and green bonds. This section of the course also examines how DFIs have increasingly incorporated climate action into their mandates. We discuss mobilizing private capital and analyze how DFIs de-risk investments, leverage concessional finance, and use innovative financial instruments such as blended finance to attract private capital into emerging markets. Finally, we cover the future of DFIs and assess emerging trends, challenges, and opportunities in development finance, including ongoing multilateral development bank (MDB) reform efforts, the impact of US policy shifts such as changes to United States Agency for International Development (USAID), and the rise of new MDBs like the Asian Infrastructure Investment Bank (AIIB), which are reshaping the global development finance landscape. This course combines readings, real-world case studies, guest speakers (practitioners from various DFIs), and interactive activities to provide a practical understanding of DFIs and their role in financing the climate transition in emerging markets and developing economies (EMDEs). By the end of the course, students are better prepared for careers in DFIs; environmental, social, and governance (ESG) and sustainable investment; impact investing; and climate finance.