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Determinants of Public–Private Partnerships in Infrastructure in Asia: Implications for Capital Market Development

Author

Listed:
  • Hyun, Suk

    (Korea Capital Market Institute)

  • Park, Donghyun

    (Asian Development Bank)

  • Tian, Shu

    (Asian Development Bank)

Abstract

In this study, we attempt to understand the role of greater access to finance, i.e., stocks, bonds, and bank loans, in public–private partnership (PPP) investment in developing countries. Most developing countries still depend heavily on fiscal financing for infrastructure projects. Our empirical results reconfirm the fact that banks remain the major source of finance for infrastructure projects. The domestic bond market should be further developed to have depth and liquidity enough to provide longterm funding for private sector investors. Interestingly, we find a negative impact of bond market development on PPP investment. A possible interpretation is that financing through government bonds, which dominates bond markets in developing countries, discourages private sector participation by reducing financing access to the corporate bond market. Our evidence underlines the importance of a well-functioning corporate bond market in developing countries, which can offer long-term financing to private sector participation in infrastructure investments.

Suggested Citation

  • Hyun, Suk & Park, Donghyun & Tian, Shu, 2018. "Determinants of Public–Private Partnerships in Infrastructure in Asia: Implications for Capital Market Development," ADB Economics Working Paper Series 552, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0552
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    References listed on IDEAS

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    1. Pawel Gasiorowski & Marian Moszoro, 2008. "Optimal Capital Structure of Public-Private Joint Ventures," IMF Working Papers 2008/001, International Monetary Fund.
    2. Marian MOSZORO, 2014. "Efficient Public-Private Capital Structures," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 103-126, March.
    3. Daniel Platz, 2009. "Infrastructure finance in developing countries—the potential of sub-sovereign bonds," Working Papers 76, United Nations, Department of Economics and Social Affairs.
    4. Yescombe, E. R. & Yescombe, E. R., 2002. "Principles of Project Finance," Elsevier Monographs, Elsevier, edition 1, number 9780127708515.
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    Cited by:

    1. Kodongo, Odongo & Mukoki, Paul & Ojah, Kalu, 2023. "Bond market development and infrastructure-gap reduction: The case of Sub-saharan Africa," Economic Modelling, Elsevier, vol. 121(C).

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    More about this item

    Keywords

    bond market development; government bond; public–private partnership;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • H00 - Public Economics - - General - - - General

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