Infrastructure Finance in Developing Countries by State and Multilateral Development Banks

Rodrígues Brochado, Mariana and Vassallo Magro, José Manuel (2012). Infrastructure Finance in Developing Countries by State and Multilateral Development Banks. In: "XVIII International Conference on Industrial Engineering and Operations Management (ICIEOM 2012)", 09/07/2012 - 11/07/2012, Guimaraes, Portugal. p. 1.

Description

Title: Infrastructure Finance in Developing Countries by State and Multilateral Development Banks
Author/s:
  • Rodrígues Brochado, Mariana
  • Vassallo Magro, José Manuel
Item Type: Presentation at Congress or Conference (Article)
Event Title: XVIII International Conference on Industrial Engineering and Operations Management (ICIEOM 2012)
Event Dates: 09/07/2012 - 11/07/2012
Event Location: Guimaraes, Portugal
Title of Book: XVIII International Conference on Industrial Engineering and Operations Management (ICIEOM 2012)
Date: 2012
Subjects:
Faculty: Centro de Investigación del Transporte (TRANSyT) (UPM)
Department: Otro
Creative Commons Licenses: Recognition - No derivative works - Non commercial

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Abstract

Infrastructure concession is an alternative widely used by governments to increase investment. In the case of the road sector, the main characteristics of the concessions are: long-term projects, high investments in the early years of the contract and high risks. A viability analysis must be carried out for each concession and consider the characteristics of the project. When the infrastructure is located in a developing country, political and market growth uncertainties should be add in the concession project analysis, as well as economic instability, because they present greater risks. This paper is an analysis of state bank participation in road infrastructure finance in developing countries. For this purpose, we studied road infrastructure financing and its associated risks, and also the features of developing countries. Furthermore, we considered the issue of state banks and multilateral development banks that perform an important role by offering better credit lines than the private banks, in terms of cost, interest and grace period. Based on this study, we analyzed the Brazilian Development Bank - BNDES – and their credit supply to road infrastructure concessions. The results show that BNDES is the main financing agent for long-term investment in the sector, offering loans with low interest rates in Brazilian currency. From this research we argue that a single state bank should not alone support the increasing demand for finance in Brazil. Therefore, we conclude that there is a need to expand the supply of credit in Brazil, by strengthening private banks in the long-term lending market.

More information

Item ID: 19240
DC Identifier: http://oa.upm.es/19240/
OAI Identifier: oai:oa.upm.es:19240
Official URL: http://www.icieom.org/BKP_icieom2012/index.asp
Deposited by: Memoria Investigacion
Deposited on: 19 Sep 2013 17:23
Last Modified: 22 Sep 2014 11:15
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