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The role of lender behavior in International project finance


  • Sumru Altug
  • Sule Ozler
  • Murat Usman


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 is 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 where the project is financed with probability p

Suggested Citation

  • Sumru Altug & Sule Ozler & Murat Usman, "undated". "The role of lender behavior in International project finance," Discussion Papers 00/33, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:00/33

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    References listed on IDEAS

    1. Gale, William G & Scholz, John Karl, 1994. "IRAs and Household Saving," American Economic Review, American Economic Association, vol. 84(5), pages 1233-1260, December.
    2. Nishimura, Kazuo & Zhang, Junsen, 1992. "Pay-as-you-go public pensions with endogenous fertility," Journal of Public Economics, Elsevier, vol. 48(2), pages 239-258, July.
    3. Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters,in: Privatizing Social Security, pages 215-264 National Bureau of Economic Research, Inc.
    4. Gale, W.G. & Scholtz, J.K., 1992. "IRAs and household saving," Discussion Paper 1992-44, Tilburg University, Center for Economic Research.
    5. Keith Blackburn & Giam Pietro Cipriani, 1998. "Endogenous fertility, mortality and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(4), pages 517-534.
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    More about this item


    International project finance; lender behavior; private information; coordination problem; subgame perfect equilibria.;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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