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http://ssrn.com/abstract=567112
 
 

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Project Finance as a Risk-Management Tool in International Syndicated Lending


Christa Hainz


CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Stefanie Kleimeier


Maastricht University - Limburg Institute of Financial Economics (LIFE)

December 2006

Governance and the Efficiency of Economic Systems (GESY), SFB/TR 15, Discussion Paper No 183

Abstract:     
We develop a double moral hazard model that predicts that the use of project finance increases with both the political risk of the country in which the project is located and the influence of the lender over this political risk exposure. In contrast, the use of project finance should decrease as the economic health and corporate governance provisions of the borrower's home country improve. When we test these predictions with a global sample of syndicated loans to borrowers in 139 countries, we find overall support for our model and provide evidence that multilateral development banks act as "political umbrellas".

Number of Pages in PDF File: 48

Keywords: Project finance, syndicated loans, political risk, double moral hazard

JEL Classification: D82, F34, G21, G32

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Date posted: August 3, 2004  

Suggested Citation

Hainz, Christa and Kleimeier, Stefanie, Project Finance as a Risk-Management Tool in International Syndicated Lending (December 2006). Governance and the Efficiency of Economic Systems (GESY), SFB/TR 15, Discussion Paper No 183. Available at SSRN: http://ssrn.com/abstract=567112 or http://dx.doi.org/10.2139/ssrn.567112

Contact Information

Christa Hainz
CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )
Poschinger Str. 5
Munich, 81069
Germany
Stefanie Kleimeier (Contact Author)
Maastricht University - Limburg Institute of Financial Economics (LIFE) ( email )
P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 3883733 (Phone)
+31 43 3884875 (Fax)
HOME PAGE: http://www.stefaniekleimeier.nl
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