Overcoming political risk in developing economies through non-local debt

ABSTRACT: Infrastructure investments are essential in generating sustainable development but also involve extensive political risk and potentially unreliable local partners. We study how banks financing such investments use syndication with non-local partners to pool economic leverage from trade, investment, and FDI. Using 5928 of the world’s largest infrastructure and energy projects in 160 countries between 2000 and 2013, we show that banks pool economic leverage from banks with dominant economic ties to the host country and from supranational institutions. Our findings contribute three distinct elements to the nonmarket strategy literature. First, they highlight the strategic value of macro-economic dependencies in the management of political risk. Second, our study positions non-local alliances

SUBMITTER: Mullner J 

PROVIDER: S-EPMC9062290 | biostudies-literature | 2022 May

REPOSITORIES: biostudies-literature