Development Banks Overview

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Questions and Answers

What is the primary concern of development banks?

  • Providing short-term capital to industry
  • Offering daily financial services to businesses
  • Investing in non-viable business ventures
  • Assisting in the development of viable businesses (correct)

How are Development Finance Corporations (DFCs) referred to?

  • Commercial banks
  • Insurance providers
  • Specialized credit agencies (correct)
  • Investment companies

What role did development banks play in the industrialization process of Continental Europe and Japan?

  • Playing a crucial role in rapid industrialization (correct)
  • Focusing on the agricultural sector
  • Offering grants to new startup businesses
  • Providing short-term loans to established businesses

How did government support development banks in terms of financial assistance?

<p>Giving share capital provision (B)</p> Signup and view all the answers

Which term is NOT commonly used to describe Development Finance Corporations (DFCs)?

<p>Real estate companies (D)</p> Signup and view all the answers

In which type of economies do Development Finance Corporations (DFCs) hold a significant place?

<p>Commonwealth Caribbean economies (D)</p> Signup and view all the answers

Why do development finance companies have their senior management appointed by the political directorate?

<p>To fulfill statutory defined goals and objectives (A)</p> Signup and view all the answers

What is one reason private financial institutions fail to adequately finance high-risk new ventures?

<p>Unwillingness to bear long-term risks (B)</p> Signup and view all the answers

Why is using 'social cost-benefit' criteria important in credit allocation decisions?

<p>To assess externalities and internal performance (B)</p> Signup and view all the answers

What makes financial flows to development projects more risky compared to established enterprises?

<p>Less stable cash flows (D)</p> Signup and view all the answers

How do commercial banks differ from development banks in providing long-term finance?

<p>Commercial banks lack specialized skills (C)</p> Signup and view all the answers

Why do financial rate of return criteria sometimes conflict with social cost-benefit criteria in financing decisions?

<p>Conflict arises from different perspectives on project evaluation (C)</p> Signup and view all the answers

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