Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93948
Authors: 
Hainz, Christa
Kleimeier, Stefanie
Year of Publication: 
2006
Series/Report no.: 
SFB/TR 15 Discussion Paper 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'.
Subjects: 
project finance
syndicated loans
political risk
double moral hazard
JEL: 
D82
F34
G21
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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