Publicaciones Trinidad y Tobago
Anthony Birchwood, mayo 2007
This document analizes the case of the Agricultural Development Bank (ADB) of Trinidad and Tobago. It argues that development banks thrive best when the targeted sector is expanding and sector demand is increasing. The continued operation of a specialist development bank such as the ADB requires strong political and institutional support to the sector to accompany it, if it is to be successful. There is also evidence that the marketing approach is essential for the success of development banks, as in the case of ADB where the bank found it necessary to reinvent itself, continuously thriving for innovations and continuously consulting the market for feedback in order to develop products to satisfy customer needs.
The study suggests that ADB can significantly improve its viability through non-lending methods of disbursing funds, since loans increased its expenses and did not contribute to its profitability given the maintenance of repressed interest rates. In addition, economies of scale mattered to the efficiency of the institution, suggesting that the bank needed to strive after asset expansion by writing more business.
Finally, the study contends that risk management techniques, inclusive of the quantification of risks, are essential to improving the viability of development banks such as ADB. These banks need to embark on non-traditional ideas such as outsourcing of non-core activities, particularly in light of increasing complexities and the demand for specialist skills associated with financial management.