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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/203

Title: Political risk in syndicated lending: theory and empirical evidence regarding the use of project finance
Authors: Hainz, Christa
Kleimeier, Stefanie
Keywords: project finance
syndicated loans
political risk
international finance
double moral hazard
transition economies
Issue Date: 13-Jan-2004
Publisher: CEIS
Series/Report no.: Quaderni CEIS; 197
Abstract: Why do bank grant project finance loans to borrowers in risky countries? Our double moral hazard model predicts that project finance is optimal if the degree of moral hazard of the firm’s manager is high and either the project faces high levels of political risk or the bank has influence over the political risk exposure of the project. Using a global and a transition economy sample of project finance loans from 1980 to 2003, we find empirical support of our predictions regarding firm moral hazard and political risk. Regarding the bank’s role only the influence of the IFC is significant.
URI: http://hdl.handle.net/2108/203
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