National Development Banks as Active Financiers

This chapter argues that Germany’s national development bank, KfW, derives its legitimacy as an important policy actor through three characteristics: (i) it acts on the financial market with the government’s backing to pursue economic—rather than purely commercial—objectives; (ii) as a government agency, it has privileged access to officials and regulators; and (iii) it has extensive in-house technical and engineering expertise. As such, KfW can profoundly impact how these policies are implemented at five stages of the policy process: agenda setting, negotiation, implementation, monitoring, and enforcement. This conceptualization is applied to two illustrative case studies: facilitating Germany’s shift towards a green economy (the Energiewende) and coping with challenges of the 2008 global financial crisis.