In the wake of the financial crisis, public and private investment has stagnated due to loss of confidence and austerity policies. The supply side for investment is complex, with the boundaries between public and private often blurred. The overall landscape varies widely between countries, but is characterised by the growing importance of national promotional banks (NPBs) in economic development. Carefully calibrated financial instruments, often provided through NPBs, can provide sustainable support for revenuegenerating / saving projects in areas like SME support, R&D&I and energy efficiency where market imperfections result in suboptimal levels of investment.
The uptake of ESI Fund co-financed FIs has increased in 2014-20, but remains focused on loan-based SME support. The regulatory framework for ESIF co-financed FIs has improved, especially through mandatory ex ante assessments, but the implementation of FIs remains challenging for Managing Authorities, suggesting that more timely guidance, more stable rules, and perhaps more ‘off-the-shelf’ instruments would be beneficial. However, the plethora of initiatives at domestic and European levels can make the FI ‘scene’ difficult to decipher and quantify. Related, there is evidence of policy competition, pointing to the need to rationalise modes of intervention and tailor FIs to the relevant institutional and economic context.