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Project finance loan spreads and disaggregated political risk

Girardone, Claudia and Snaith, Stuart (2011) 'Project finance loan spreads and disaggregated political risk.' Applied Financial Economics, 21 (23). pp. 1725-1734. ISSN 0960-3107

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This article provides novel evidence on project finance loan pricing using economic and disaggregated political risk determinants. As expected, our findings suggest that the presence of loan guarantees and lower levels of aggregate political risk results in cheaper project finance loans. The evidence in support of disaggregated political risk as a pricing determinant is negligible for developed countries, but significant for developing countries. For the latter we find that loan spreads are negatively related to the effectiveness, quality and strength of a country's legal and institutional systems whilst lower levels of government stability and democratic accountability are associated with lower loan spreads. Our results are consistent with a risk allocation approach to project finance deals. © 2011 Taylor & Francis.

Item Type: Article
Uncontrolled Keywords: project finance; banking; loan pricing; political risk
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 03 Nov 2011 16:10
Last Modified: 15 Jan 2022 00:38

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