What is 'The World Bank'

The World Bank is an international organization dedicated to providing financing, advice and research to developing nations to aid their economic advancement. The World Bank was created out of the Bretton Woods agreement as a result of many European and Asian countries needing financing to fund reconstruction efforts. As of 2016, the Bank predominantly acts as an organization that attempts to fight poverty by offering developmental assistance to middle- and poor-income countries.

BREAKING DOWN 'The World Bank'

The World Bank is a provider of financial and technical assistance to developing countries around the globe. The bank considers itself a unique financial institution that provides partnerships to reduce poverty and support economic development by giving loans and offering advice and training to both the private and public sectors. The World Bank was established in 1944, is headquartered in Washington D.C., and has more than 10,000 employees in over 120 offices worldwide.

The Structure of The World Bank

The World Bank has expanded from the single institution that was created in 1944 to a group of five unique and cooperative institutional organizations. The first organization is the International Bank for Reconstruction and Development (IBRD) , an institution that provides debt financing to governments that are considered middle income. The second organization within The World Bank is the International Development Association (IDA), a group that gives interest-free loans to governments of poor countries.

The International Finance Corporation (IFC), the third organization, focuses on the private sector and provides developing countries with investment financing and financial advisory services. The fourth part of The World Bank is the Multilateral Investment Guarantee Agency (MIGA), an organization that promotes foreign direct investments in developing countries. The fifth and final organization is the International Centre for Settlement of Investment Disputes (ICSID), an entity that provides arbitration on international investment disputes.

The Goals and Benefits of The World Bank

The World Bank has two stated goals that it aims to achieve by 2030. The first is to end extreme poverty by decreasing the amount of people living on less than $1.90 a day to below 3% of the world population. The second is to increase overall prosperity by increasing the income growth in the bottom 40% of the world's population.

Beyond its specific goals, the World Bank provides qualifying individuals and governments with low-interest loans, zero-interest credits and grants. These debt borrowings and cash infusions help with global education, health care, public administration, infrastructure and private sector development. The World Bank also shares information with world governments through policy advice, research and analysis and technical assistance.

RELATED TERMS
  1. World Bank Group

    Five international organizations dedicated to providing financial ...
  2. International Finance

    Definition of international finance
  3. Multilateral Investment Guarantee ...

    An organization established in 1988 by the World Bank and based ...
  4. Australian Bankers Association ...

    An association of banks that work on behalf of its member financial ...
  5. Concentration Bank

    A financial institution that is the primary bank of an organization, ...
  6. Third World

    A phrase commonly used to describe a developing nation, but actually ...
Related Articles
  1. Insights

    What Is The World Bank?

    You've heard of the World Bank, now find out how it functions and why some groups oppose it.
  2. Insights

    World Bank Data For Dummies

    Developing countries can't always afford to track the data crucial to setting the right economic policies and programs. That's where the World Bank steps in.
  3. Insights

    IMF, WTO and World Bank: How Do They Differ?

    From loans to Athens and trade deals in Asia to economic reports on the world’s most successful and most troubled economies, these organizations make headlines across the globe
  4. Insights

    Could Third World Debt Relief Pay Off?

    Debt is as much a political tool as an economic one. Discover if wholesale debt forgiveness is the answer for developing countries.
  5. Insights

    The World's Top 10 Banks

    Learn more about the world's largest banks and how more financial power shifts eastward as China is home to four of the world's largest banks.
  6. Personal Finance

    What Is The Bank For International Settlements?

    Get the scoop on the structure and functions of the oldest global financial institution.
  7. Personal Finance

    Retail Banking Vs. Corporate Banking

    Retail banking is the visible face of banking to the general public. Corporate banking, also known as business banking, refers to the aspect of banking that deals with corporate customers.
  8. Investing

    Introduction To The Chinese Banking System

    As China steps into a greater role in the global economic system, their banking system continues to evolve.
  9. Insights

    Inspecting A Country's Debt

    Tensions over just how to handle debt are pitting the rich world against the developing world like never before.
RELATED FAQS
  1. The Difference Between the International Monetary Fund and the World Bank

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ... Read Answer >>
  2. How does investment banking differ from commercial banking?

    Discover how investment banking differs from commercial banking, the responsibilities of each and how the two can be combined ... Read Answer >>
  3. What countries represent the largest portion of the global banking sector?

    Learn how four countries, China, the U.K., France and the U.S., exhibit the greatest influence over the global banking sector, ... Read Answer >>
  4. What are the major categories of financial institutions and what are their primary ...

    Understand the various types of financial institutions that exist in today's economy, and learn the purpose each serves in ... Read Answer >>
  5. What economic indicators are important to consider when investing in the banking ...

    Find out which economic indicators are most useful for investors in the banking sector, especially those influenced by central ... Read Answer >>
  6. What proportion of the global economy is comprised of banks?

    Read about the size and scope of the global banking sector, its importance and why it should continue to form a sizable portion ... Read Answer >>
Hot Definitions
  1. Contango

    A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Acid-Test Ratio

    A stringent indicator that indicates whether a firm has sufficient short-term assets to cover its immediate liabilities. ...
  4. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
  5. Taxes

    An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government ...
  6. Impaired Asset

    A company's asset that is worth less on the market than the value listed on the company's balance sheet. This will result ...
Trading Center