The supply-side driving hypothesis assumes that financial development can promote economic growth. Therefore, growth is positively dependent on investment. Investments are supported by borrowing, which in turn is made possible by deposits through banks and non-bank financial institutions. Development banks are one such financial institution that is responsible for channeling funds from savers to borrowers to support investments. However, these institutions face numerous challenges resulting from the effects of financial liberalization, globalization and the increased opportunities created by technology. Therefore, the Development Bank of Jamaica must continually be in the mode of adapting, maintaining and reviewing its procedures so that they can respond positively to the challenges they face. According to Levine (1997), the financial system allows for a more effective exchange of goods and services, mobilizes individual and corporate savings, allows for a more efficient allocation of resources and monitoring of corporate management through capital markets and allows for the sharing of risks. There is a heavy reliance on financial intermediaries such as building societies, insurance companies, banks, pension funds, credit unions and the stock market. Therefore, without them investments may not take place, technological progress could be slowed down and this would lead to a reduction in the growth process. There is obviously a relationship between the development of a financial sector and economic growth once the functions of the financial sector are carried out efficiently and effectively. Despite the support, incentives and initiatives implemented for the Development Bank of Jamaica, the fact remains that the effective operation of the bank will encompass...... half the paper...... of private banks. Therefore, well-connected industrialists may have a superior ability to attract loans or capital from development banks, even in cases where they would be able to obtain capital elsewhere (Ades and Di Tella, 1997; Haber, 2002; Krueger, 1990) . However, La Porta et al., (2002) document that state ownership of banks is associated with lower subsequent economic growth and argue that politicians use state-owned banks to advance their political goals. Good governance plays an important role in preventing government interference in credit decisions, as it distinguishes between the rights and responsibilities of different DB stakeholders. To achieve efficiency, the bank must be organized as a business, with shareholders, a board of directors and management. The responsibility of each of these groups must be clearly stated.