Publication Details
Abstract
Project finance is certainly increasingly important to help sustain investment and economic growth in the long run, in particular in the banking industry of emerging economies. In recent years, commercial banks tend to utilize project financing approaches to finance investments of larger scale, while they also try actively to manage theirfinancial risk and make an effective use of the capital. But, currently practiced project financing in commercial banks are usually confronted with problems associated with risk evaluation, institutional restrictions, inadequate analytical devices and ineffective monitoring practices.
This research has as its purpose: to investigate the practice of project financing of investment deeds in commercial banks and, as they are built up, propose recommendations with practical suggestions for improvement. The project uses qualitative and quantitative analysis tools by reviewing international practices, comparing them and assessing the most important financial ratios (ratios) of projects financed. Attention is devoted to risk management mechanisms, the design of financial contracts and to the banks’ role in controlling the investment’s stakeholders.
The study concludes that there is need to strengthen methodologies for risk assessment, improve institutional frameworks and usage of the new financial instruments. The results provide valuable implications for the improvement on creation of sounder prjective financing systems and relevant policies in commercial banks that can help the bank systen to be used by banking institutions as well as policymakers in promoting investment lead economic development.