The Public Policy Institute for Wales has been asked to conduct a scoping study to examine the effectiveness and viability of a public development bank in Wales. There have been continued reports of insufficient credit for small and medium-sized businesses, and inadequate personal banking services in some communities. One proposed solution to both of these problems is to increase the role of the state in the banking sector through the opening of a public development bank.
However, there has not been rigorous review of the evidence about what similar arrangements elsewhere have achieved, and whether these could be replicated in Wales. This study is particularly interested in:
- What is actually meant by the term ‘public development bank’.
- How such a bank would be financed.
- Whether public development banks stimulate small and medium enterprise lending.
- Whether public development banks stimulate local economic development.
- The role of government in establishing public development banks.
This scoping study will explore different models of ‘public banking’ from around the world and review the evidence about their effectiveness and viability in Wales. This will test whether there is a need for more detailed research to determine whether there would be value in establishing a public bank in Wales.