Credit Risk Dynamics of Infrastructure Investment: Considerations for Financial Regulators
Prudential regulation of infrastructure investment plays an important role in creating an enabling environment for mobilizing long-term finance from institutional investors, such as insurance companies, and, thus, gives critical support to sustainable development. Infrastructure projects are asset-i...
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Washington, D.C
The World Bank
2018
|
| Schriftenreihe: | World Bank E-Library Archive
|
| Online-Zugang: | kostenfrei |
| Zusammenfassung: | Prudential regulation of infrastructure investment plays an important role in creating an enabling environment for mobilizing long-term finance from institutional investors, such as insurance companies, and, thus, gives critical support to sustainable development. Infrastructure projects are asset-intensive and generate predictable and stable cash flows over the long term, with low correlation to other assets; hence they provide a natural match for insurers' liabilities-driven investment strategies. The historical default experience of infrastructure debt suggests a "hump-shaped" credit risk profile, which converges to investment grade quality within a few years after financial close -- supported by a consistently high recovery rate with limited cross-country variation in non-accrual events. However, the resilient credit performance of infrastructure -- also in emerging market and developing economies -- is not reflected in the standardized approaches for credit risk in most regulatory frameworks. Capital charges would decline significantly for a differentiated regulatory treatment of infrastructure debt as a separate asset class. Supplementary analysis suggests that also banks would benefit from greater differentiation, but only over shorter risk horizons, encouraging a more efficient allocation of capital by shifting the supply of long-term funding to insurers |
| Beschreibung: | 1 Online-Ressource |
| DOI: | 10.1596/29540 |
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| spellingShingle | Jobst, Andreas A. Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators |
| title | Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators |
| title_auth | Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators |
| title_exact_search | Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators |
| title_exact_search_txtP | Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators |
| title_full | Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators Andreas A Jobst |
| title_fullStr | Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators Andreas A Jobst |
| title_full_unstemmed | Credit Risk Dynamics of Infrastructure Investment Considerations for Financial Regulators Andreas A Jobst |
| title_short | Credit Risk Dynamics of Infrastructure Investment |
| title_sort | credit risk dynamics of infrastructure investment considerations for financial regulators |
| title_sub | Considerations for Financial Regulators |
| url | https://doi.org/10.1596/29540 |
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