Financing utilities: How the role of the European Investment Bank shifted from regional development to making markets

• New insight into the financing of utilities by the European Investment Bank (EIB) is provided.
• We assemble and analyze an original database on EIB loans to utilities from 1958 until 2004.
• EIB utility lending can be broken into three phases prioritizing development, enlargement and energy, and markets.
• Our findings help explain the EIB's current conservative approach to lending in times of austerity and crisis.

In the face of continuing financial and economic crises, the European Investment Bank (EIB) has been criticized for being overly-conservative in its loans to Europe. Critics in particular have called on the EIB to vastly increase its investment in utilities as a counter-cyclical measure. To take stock and, in order to evaluate the role of the EIB in financing utilities over time, we compile and analyze an original database of all EIB utilities project loans from 1958 to 2004. We find the EIB started out by functioning as a regional development bank, prioritizing utilities finance in its members' poorer zones; however, energy crises in the 1970s marked a shift whereby the logic of EIB finance to utilities became more politically-oriented. By the 1980s, utilities projects supported by the EIB were intimately related to those required for the Single Market. The origins of the EIB's current conservative approach to utilities loans was born in the 1970s and fully consolidated by the 1990s.