Case studies on the role of project finance in Taiwanese banking sector

• Main Authors: Chin-Sung Lu, 呂錦淞
• Other Authors: Li-ping Cheng
• Format: Others
• Language: zh-TW
• Published: 2002
• Online Access: http://ndltd.ncl.edu.tw/handle/31640116980155186857

碩士 === 世新大學 === 經濟學研究所(含碩專班) === 90 === Abstract This research highlights banks' role of contractual arrangements of project finance on the crediting projectors. Project finance has recently been adopted by most governments in the world to finance public project, especially for those large scaled construction projects lacking of enough funding sources. On the other hand, private sector does the same for large investment on plant establishment. The function of modern bank is no doubt confronting serious change so as to overcome the risk as well as transaction costs encountered through project financing. Base on the contractual complexity of financed projects, the existence of high transaction cost do induce certain contractual mechanism to reduce the related transaction costs. Combining the analytical results, this research finds two major factors affecting transaction costs in project finance, namely, asymmetric information and relational-specific assets. On the other hand, government intervention into the contractual arrangement may or may not create high transaction costs, depending on whether the government pick at the right time or make decision basing on right information structure. Overall speaking, information and agency costs are the main body of the transaction costs confronting project finance. The resultant study does cope with the idea of professor Ronald H. Coase’s transaction costs theory. Government intervention is not denied per se, but the information base and timing are most important to make it efficient. By market itself, transaction costs explain the existence of contracts on project finance, similar to the reason why firms exist. The research suggests that the modern bank sector make better use information base for project financing than relying on government intervention. This research also tries to open the window for further research on project finance and other banking services based on the theory of contacts and transaction costs.