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Transformation of the international and European project finance market as a result of the crisis

Author

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  • Ágnes Csiszárik-Kocsir

    (Magyar Nemzeti Bank)

Abstract

Project financing is not a new form of funding in Hungary or in other countries. Many consider it as a product of the pre-crisis abundance of money, when relatively ample liquidity encouraged banks to enter into transactions where safe repayment could not always be seen clearly. In many cases, this excessive risk-taking resulted in defaults on project financing loans, which was also exacerbated by lack of prudence in the evaluation of transactions. The objective of this article is to present the history of project financing between 2005 and 2014 on the basis of the amounts of loan mobilised by mandated lead arrangers (MLAs) and the project bond amounts subscribed by the organisations involved in the bond issue, with special regard to Europe. The study also aims to highlight those milestones and factors that sometimes reduced and sometimes increased the project value implemented through project financing. The analysis is based on the official database of IJGlobal, using fundamental statistical methods, ratios and rates. The analysis pays special attention to the financial institutions that played the main roles before, in and after the crisis.

Suggested Citation

  • Ágnes Csiszárik-Kocsir, 2016. "Transformation of the international and European project finance market as a result of the crisis," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 15(1), pages 51-69.
    • Handle: RePEc:mnb:finrev:v:15:y:2016:i:1:p:51-69
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    References listed on IDEAS

    as
    1. Richard A. Brealey & Ian A. Cooper & Michel A. Habib, 1996. "Using Project Finance To Fund Infrastructure Investments," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(3), pages 25-39, September.
    2. Byoun, Soku & Kim, Jaemin & Yoo, Sean Sehyun, 2013. "Risk Management with Leverage: Evidence from Project Finance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 48(2), pages 549-577, April.
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    More about this item

    Keywords

    project finance; MLA; project bond; crisis; Europe;
    All these keywords.

    JEL classification:

    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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