The recent global financial crisis spurred  a renewed interest in development banking  because of the countercyclical role many  of these banks assumed during the crisis.  However, there is no agreement in the  literature concerning the nature and efficiency  of development banks. This paper focuses  on their role as agents of institutional change  and the concomitant need for their internal  transformation as institutional development  goes on. The question posed is how  development banks’ internal transformation  from the traditional development banking  model to a modern investment banking  model is affected by the political decision on  the prevailing financial regime. The paper  addresses this question by examining the  relationship between development banks  and alternative financial regimes in Greece  during the period 1963-2002. Useful insights  concerning the role of government policy in  development banking are drawn.