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Project finance as a driver of economic growth in low-income countries

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  • Kleimeier, Stefanie
  • Versteeg, Roald

Abstract

This study investigates the role of project finance as a driver of economic growth. We hypothesize that project finance is beneficial to the least developed economies as it is able to compensate for a lack of domestic financial development. The contractual structure unique to project finance leads to better investment management and governance. Investigating 90 countries from 1991 to 2005, we find support for our hypothesis. Results show that project finance fosters economic growth and that its effect is strongest in low-income countries, where financial development and governance is weakest.

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Bibliographic Info

Article provided by Elsevier in its journal Review of Financial Economics.

Volume (Year): 19 (2010)
Issue (Month): 2 (April)
Pages: 49-59

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Handle: RePEc:eee:revfin:v:19:y:2010:i:2:p:49-59

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Web page: http://www.elsevier.com/locate/inca/620170

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Keywords: Project finance Economic growth Economic development Financial development Developing countries;

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Cited by:
  1. Megginson, William L., 2010. "Introduction to the special issue on project finance," Review of Financial Economics, Elsevier, vol. 19(2), pages 47-48, April.

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