The Subsidy Dependence Index (SDI) is the most common way to measure the importance of public support for Development Finance Institutions (DFIs). We present the SDI and show its equivalence to a subsidy-adjusted measure of return on equity. We then review recent attempts to adjust the SDI. As a whole, the recent measures are either meaningless or answer unimportant questions. Their use does not lead to a better understanding of the social cost of a DFI.
Subsequent publication: Schreiner, M., & Yaron, J. (1999). The subsidy dependence index and recent attempts to adjust it. Savings and Development, 23(4), 375–405.