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In the wake of the global financial crisis, there is growing consensus that national development banks play a valuable role in development finance. This chapter looks first at the theoretical background justifying the need for development banks. The chapter then describes empirically some of the key features of national development banks, including their lending and funding structure. Finally, it analyses in depth five main functions which national development banks perform: (i) providing countercyclical lending; (ii) promoting innovation and structural transformation; (iii) enhancing financial inclusion; (iv) supporting infrastructure investment; and (v) supporting the provision of public goods, and particularly combatting climate change.