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 the 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

    The World Bank Group is the world's most prominent development ...
  2. International Competitive Bidding ...

    International competitive bidding (ICB) is a bidding process ...
  3. Bank

    A bank is a financial institution licensed as a receiver of deposits. ...
  4. Australian Bankers Association ...

    An association of banks that work on behalf of its member financial ...
  5. Business Banking

    Business banking is a company's financial dealings with an institution ...
  6. State Bank

    A state bank is a financial institution that a state has chartered ...
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

    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.
  3. Insights

    The World Bank's All-Important World Development Indicators (WDI)

    The World Development Indicators are the world's economic scorecards: they evaluate where nearly every country stands and how far it has yet to go.
  4. Personal Finance

    Banking Has Changed: What Does It Mean For Consumers?

    Banks have long been leading spenders on technological innovations. Learn the key changes in the banking industry and what institution is right for you.
  5. Insights

    A Brief History of U.S. Banking Regulation

    From the establishment of the First Bank of the United States to Dodd-Frank, American banking regulation has followed the path of a swinging pendulum.
  6. Insights

    Global Trade Outlook Clouded by Policy Uncertainty

    The World Bank says global trade and economic growth are still struggling
RELATED FAQS
  1. 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 >>
  2. What's the difference between investment banks and commercial banks?

    Understand the principal differences between investment banks and commercial banks, and the areas of banking services that ... Read Answer >>
  3. What factors are the primary drivers of banks' share prices?

    Find out which factors are most important when determining the share price of banks and other lending institutions in the ... Read Answer >>
  4. The difference between a bank guarantee and a bond

    Understand the differences between a bank guarantee and a bond – including which one is a debt instrument. Read Answer >>
Hot Definitions
  1. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  2. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  3. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  4. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  5. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  6. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
Trading Center