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Abstract
Long-term development finance provided by multilateral development banks (MDBs) is key to advancing the United Nations’ Sustainable Development Goals (UN SDGs). MDBs are, however, constrained by the availability of capital. Risk transfer can shift risk from their balance sheets to expand lending. This paper explains how ground-breaking securitisation transactions have been used by MDBs and argues that, while there are challenges, this technique has significant potential to increase development lending.
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Author's Biography
William Perraudin is the Managing Director of Risk Control Limited, an analytical advisory company specialised in risk and valuation issues. He was previously a Professor of Finance at Imperial College Business School and a Special Adviser to the Bank of England on regulatory policy issues. He has advised many multilateral financial organisations on strategic balance sheet management issues and on the design and implementation of risk models.
Federico Galizia serves and has served as a senior risk management executive for several triple-A rated multilateral development banks.
Andrew Powell is Distinguished Visiting Professor at Williams College and Non-Resident Fellow at the Center for Global Development. He has held academic appointments at Queen Mary’s College, Warwick University and Universidad Torcuato di Tella. Previous roles include Head of Research and Chief Economist at the Central Bank of Argentina, Principal Adviser, Regional Economic Adviser and Lead Economist at the Inter American Development Bank. Andrew has published many academic papers on international finance and edited several books.
Timothy Turner Since his retirement from the African Development Bank in 2020, Tim has been working on a number of advisory assignments in the development space. Tim is a Senior Adviser at the Trade and Development Bank of Eastern and Southern Africa. He is on the Investment Committee for the ILX Fund, which channels private pension resources into private sector co-financing opportunities alongside multilateral development banks. Tim is also advising the Caribbean Development Bank on balance sheet optimisation.
Citation
Perraudin, William, Galizia, Federico, Powell, Andrew and Turner, Timothy (2025, March 1). Risk transfer for MDBs: Transferring risk to lend more. In the Journal of Risk Management in Financial Institutions, Volume 18, Issue 2. https://doi.org/10.69554/ZUHT1931.Publications LLP