The Roles of Financial Institutions in Economic Place-Making

Leading financial and development stakeholders in the United Kingdom are exploring how U.K. financial institutions can expand their capacity to effectively make place-based impact investments. This paper synthesizes lessons from the United States, where financial institutions have a longer history of engaging in economic place-making, in the hopes it can inform efforts to grow the practice in the U.K. The paper begins with a discussion of two frameworks – market-based development and development finance – which are the respective principles and specialized approaches that inform the roles of financial institutions in place-based investment. It then dives into each of the three roles for financial institutions in economic place-making: direct provision of financial products, indirect investing through intermediaries, and capacity building. It concludes with an examination of governmental programs and policies to support community investments by financial institutions, followed by a discussion of the key insights and potential implications for the U.K.

December 13, 2021