With growing volumes of financial flows to developing countries, how do we know whether the RDBs are fulfilling their stated mission and not competing with private capital? When all borrowing members in their respective regions are developing countries, what drives RDBs’ decision-making? Are they driven by the borrower's need for credit (even if risky for the RDB)? Or, do they prefer safer investments where they are more likely to get paid back, but also where there is a higher likelihood of other competing credit sources? Further, do the political interests of powerful donors, or the recipient's level of democracy drive loan disbursements? This chapter provides the first step in answering these questions by evaluating RDB loans according to the economic, social, and political contexts of their borrowing members.

The previous chapter established a basis for the aggregate, regional level lending by the RDBs and examined the indicators for a select group of countries in each region. In this chapter, I statistically locate the RDBs’ policy (represented by loan disbursements) on the development institution to bank continuum, as represented by select socioeconomic indicators. Furthermore, in this chapter, I test whether hegemon(s) of the RDBs use their power to influence loan making. Finally, I examine the extent to which the Cold War is associated with the level of loans that borrowing member countries receive.

International Financial Institutions (IFIs), including the RDBs, have been at the subject of policy debates concerning their role. The central themes of the controversy are (1) whether they meet the objectives they were created to fulfill as public institutions, which include their contributions to poverty alleviation and development, and (2) whether IFIs serve the national interests of their largest donors (hegemons), making their lending practices commensurate with donor interests rather than with institutional objectives (to the extent that they differ).