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.