 Panda bond financing of the Belt and Road Initiative: An analysis of monetary mechanisms and financial risksAlfredo Schclarek (), Jiajun Xu and Pedro Amuchastegui Research in International Business and Finance, 2022, vol. 61, issue C Abstract: We examine the role of China Development Bank (CDB) in the Panda bond financing of the Belt & Road Initiative (BRI). We investigate the monetary mechanisms and the financial risks involved in the Panda bond financing of the BRI, especially exchange rate risks and balance of payment crisis risks. Our main findings are that the CDB may reduce its financial risks by acting as an underwriter of the Panda bonds rather than as the direct financer, but it may also have to act as a dealer of last resort. To reduce the risks of both the exchange rate and balance of payment crisis of the Panda bonds, it is important that the real investment projects are export-enhancing for host countries (generate foreign currency) and that the construction and execution of the real investment projects uses local suppliers based in host countries. Keywords: Belt & Road Initiative; Panda bonds; China development bank; Financial risks; Exchange rate risks; Balance of payment crisis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:61:y:2022:i:c:s0275531922000502 DOI: 10.1016/j.ribaf.2022.101662 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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