Description
The European financial development architecture needs reform. The European Investment Bank (EIB), originally established for European Union members, and the European Bank for Reconstruction and Development (EBRD), for Central and Eastern European countries, lend across a similar group of countries despite both banks official discourse standing for a clear division of their activities. Drawing on Agency theory, this paper examines the execution of both EIB and EBRD mandates between 1991 and 2018 by investigating EIB and EBRD investments in those countries borrowing from both institutions. The paper finds both the EIB and the EBRD expand their activities beyond their mandates. We argue agency loss largely explains this expansion.
