The Relationship between Financial Development and Private Investment Commitments in Energy Projects

Lika Ba, Farid Gasmi, and Paul Noumba Um
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Lika Ba, Farid Gasmi, and Paul Noumba Um: Ecole des Hautes Etudes en Sciences Sociales, Toulouse School of Economics, University of Toulouse Capitole, and The World Bank

Journal of Economic Development, 2017, vol. 42, issue 3, 17-40

Abstract: This paper investigates the extent to which the level of development of country¡¯s financial sector draws private participation in energy projects¡¯ financing in a 1990-2007 dataset on 56 developing countries. We find that a financial sector that offers proper financing and risk-mitigating instruments indeed contributes to improving private participation. Macroeconomic development and stability and greater energy needs are also found to be significant determinants of a country¡¯s appeal to private investors. While country risk dampens investors¡¯ will to participate in energy projects, higher interest rate and exchange rate risk do not seem to divert them away.

Keywords: Infrastructure; Energy, Public-private Partnership, Financial Development, Growth, Panel Data (search for similar items in EconPapers)
JEL-codes: C3 G15 L33 L38 L94 L97 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:42:y:2017:i:3:p:17-40

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