A Development Finance Institution (DFI) is an alternative financial institution which includes microfinance institutions, community development financial institution and revolving loan funds. DFIs prime goal is to co-invest with the private sector in order to stimulate investments that promote development. These institutions play an important role in providing credit through higher risk loans, equity positions and risk guarantee instruments to private sector investments in developing countries.
DFIs are usually 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). The main bilateral and multilateral DFIs include:
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