Development finance institution

A development finance institution (DFI) is an alternative financial institution which includes microfinance institutions, community development financial institution and revolving loan funds. These institutions provide a crucial role in providing credit in the form of higher risk loans, equity positions and risk guarantee instruments to private sector investments in developing countries. DFIs are backed by states with developed economies. In 2005, total commitments (as loans, equity, guarantees and debt securities) of the major regional, multilateral and bilateral DFIs totalled US$45 billion (US$21.3 billion of which went to support the private sector).

DFIs provide finance to the private sector for investments that promote development and to help companies to invest, especially in countries with various restrictions on the market.

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