This paper summarizes evidence on financial instruments and regulatory approaches to spur private investment in pursuit of the 2030 Sustainable Developments Goals. Starting from a theoretical framework demonstrating that raising the marginal product of capital is the key to crowding in private investment, it uses Robert Merton’s functional approach to financial intermediation to assess the track record and prospects for five types of instruments/regulatory approaches: guarantees, public-private partnerships, syndicated loans, sustainable financial contracts, and climate and banking regulations and policies. Despite considerable gains in the amount of private investment mobilized by these vehicles, the volumes still fall short of the trillions of dollars estimated to be necessary to achieve the Sustainable Developments Goals. Efforts to share relevant data, encourage more academic research, and publicize and demonstrate the effectiveness of these approaches, much of which is already being undertaken by the World Bank and other multilateral development banks, could be crucial to scale up private capital mobilization.
Authors
Cull, Robert, Gill, Indermit, Pedraza , Alvaro, Ruiz-Ortega, Claudia, Zeni, Federica
- Citation
- “ Cull, Robert ; Gill, Indermit ; Pedraza , Alvaro ; Ruiz-Ortega, Claudia ; Zeni, Federica . 2024 . Mobilizing Private Capital for the Sustainable Development Goals . Policy Research Working Paper; 10838 . © Washington, DC: World Bank . http://hdl.handle.net/10986/41864 License: CC BY 3.0 IGO . ”
- Collection(s)
- Policy Research Working Papers
- DOI
- http://dx.doi.org/10.1596/1813-9450-10838
- Identifier externaldocumentum
- 34359939
- Identifier internaldocumentum
- 34359939
- Pages
- 56
- Published in
- United States of America
- RelationisPartofseries
- Policy Research Working Paper; 10838
- Report
- WPS10838
- Rights
- CC BY 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by/3.0/igo/
- UNIT
- Off of Sr VP Dev Econ/Chief Econ (DECVP)
- URI
- https://hdl.handle.net/10986/41864
- date disclosure
- 2024-07-12
- region geographical
- World
Files
Table of Contents
- Robert Cull Indermit Gill Alvaro Pedraza 1
- Claudia Ruiz-Ortega 1
- Federica Zeni 1
- In conclusion four limitations of private capital mobilization initiatives should be kept in mind 4
- Robert Cull Indermit Gill Alvaro Pedraza Claudia Ruiz-Ortega and Federica Zeni 5
- JEL Codes 5
- Keywords 5
- 1. Private Capital Mobilization Catalyzation and Growth 7
- Box 1. Private Capital Mobilization World Bank Group Definitions 7
- Private Capital Mobilized 7
- Direct - 8
- Indirect 8
- Private Capital Catalyzed 8
- 2. PCM and the Functional Approach to Financial Intermediation 12
- Box 2 14
- Function 1 Payments Function 2 Pooling of Funds Function 3 Resource Transfer Function 4 Coping with Risk and Uncertainty Function 5 Pricing Function 6 Asymmetric Information and Incentive Problems 14
- 3. Guarantees 15
- 4. Public-Private Partnerships 20
- 5. Syndicated Loans 25
- 6. Sustainable Financial Contracts 29
- Figure 1 carbon pricing regulation co2 in blue vs sustainable debt of total debt in green 31
- Figure 2 Cumulative sustainable debt issuances 33
- 6.1 Labeled Bonds Simplicity and Versatility 33
- Taxonomy and Standards 34
- Strategic Issuances 35
- 6.2 Result-Based Bonds Flexibility and Additionality 36
- Sovereign Debt Issuers 36
- 7. Climate Policies and Green Lending through Private Banks 39
- 7.1 Policies in Credit Markets 39
- Loan Subsidies 39
- Credit Guarantees 40
- Prudential Regulation 41
- 7.2 Measuring Policy Effectiveness 42
- 7.3 Scaling up Green Lending 43
- 8. Discussion and Conclusions 45
- Select 46
- Experiment 47
- Promote 47
- Share 47
- Dive 47
- Design 47
- Participate 48
- References 49
