From Stalemate to Launch? Explaining the Delayed Establishment of the SCODB

The protracted delay of the Shanghai Cooperation Organization Development Bank (SCODB) stands in sharp contrast to the relatively rapid establishment of other China‐initiated multilateral development banks. Why did the SCODB require 14 years to move from proposal to “launching the process”? This study argues that the delay stems from institutional DNA incompatibility—a structural mismatch between the SCO's security‐oriented governance logic and the operational requirements of a multilateral development bank (MDB). Through process tracing across four phases (2010–2025), we demonstrate that this incompatibility manifested across two interconnected dimensions: first, governance design conflicts—SCO principles of consensus, sovereignty protection, and noninterference clash with MDB requirements of weighted voting, hierarchical governance, operational autonomy, and market accountability; second, power dynamics and strategic bargaining—Pronounced economic asymmetries among member states, combined with consensus‐based decision rules, generated multiple veto points that prolonged negotiations over capital shares, voting arrangements, and institutional positioning. External geopolitical shifts reshaped incentives but did not eliminate these structural constraints. We also identify governance innovations necessary for overcoming institutional DNA incompatibility. The study contributes theoretically by highlighting parent‐organization type as a key antecedent in MDB formation and empirically by providing the first systematic account of the SCODB's evolution.