Abstract:Purpose
The purpose of this paper is to assess whether project finance loans were properly priced based on their risk before the crisis of 2008-2009 and what lessons can be learned under different market circumstances.
Design/methodology/approach
A literature review presents the structure of project financing, how banks are inspired to apply risk-adjusted price calculations for loans to create value for shareholders and how risk measurement differs by project loans. The authors adapt a general model for risk… Show more
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