10 Years of Belt & Road Initiative: Challenges and Opportunities of Asian Financial Corporation

Abstract

This paper will focus primarily on the formidable challenges faced by Asian financial corporations and investigate their potential to transform into opportunities in the near future. In this paper, three key challenges are highlighted. Information asymmetry is the primary obstacle preventing Asian financial institutions from offering private capital for participation in the BRI project. The phenomenon of information asymmetry manifests itself in the realm of financing procedures due to the fact that borrowers typically have a greater understanding of their investment projects than lenders, who are typically represented by financial institutions. A communication gap has exacerbated the lack of private capital within the BRI: the identification and formulation of financially viable initiatives that can be presented to the private sector effectively. Inadequately implemented infrastructure projects have the potential to fall short of their expected returns, thereby exposing financial institutions to the risk of non-performing loans. This challenge presents an opportunity to establish a comprehensive data hub that provides financial institutions and project stakeholders with convenient access to relevant information regarding project characteristics, regulatory dimensions, cost analysis, and project implementation. The ecological risks associated with the BRI, such as the potential for societal disruption due to construction practises or environmental pollution, are the third challenge highlighted in this paper.

Keywords: Belt and Road Initiative, Private Capital, Information Asymmetry, Construction Infrastructure, Green Belt and Road Initiative

JEL Classification: F620, G230, G240, H540, L320