Development Finance Institutions in Developing Countries: A Literature Review

Development Finance Institutions (DFIs) are government-owned entities that play an increasingly important role in supporting private sector projects in developing countries. This paper synthesizes key findings from the academic and grey literature to provide a comprehensive understanding of DFIs. We structure the discussion around five core questions: the rationale for the existence of DFIs, their operational models, resources and instruments, financial performance, and impact on beneciaries and broader communities. By highlighting both established knowledge and gaps, this synthesis aims to guide policymakers, practitioners, and researchers. The paper concludes by suggesting directions for future research, addressing pressing uncertainties, and advancing the discourse on DFIs’ contributions to development finance.