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The Role of Lender behavior in International Project Finance

Author

Listed:
  • Sumru Altug

    () (University of York and CEPR)

  • Murat Usman

    () (Koc University)

  • Sule Ozler

    () (University of California, Los Angeles)

Abstract

A sovereign borrower seeks to raise funds internationally to finance a fixed-size project, which no single lender can finance alone. Lenders cannot lend more than their endowments, which are private information. A coordination failure arises therefore, some socially desirable projects may not be financed, even if ex post feasible. There are multiple equilibria, and a conflict exists between lenders about which equilibrium to coordinate on. When endowments are volatile, some lenders prefer an equilibrium in which the project is financed with probability p

Suggested Citation

  • Sumru Altug & Murat Usman & Sule Ozler, 2001. "The Role of Lender behavior in International Project Finance," Economics Bulletin, AccessEcon, vol. 28(2), pages 1.
  • Handle: RePEc:ebl:ecbull:eb-01aa0005
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    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F2 - International Economics - - International Factor Movements and International Business

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