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The role of lender behavior in International project finance

Author

Listed:
  • Sumru Altug
  • Sule Ozler
  • Murat Usman

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 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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    Keywords

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

    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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