Research On Risk Management Of Project Finance In China

Project finance has become an important method of financing large-scale project in 1970s, such as infrastructure's construction, power plant, integrated oil refineries, steel mills. Unlike traditional asset-based financing, where lenders have recourse to the assets of the project sponsor, "pure", zero recourse project finance is a method of financing large-scale, capital intensive projects, in which only the cash flows generated by the project serve as the source of loan repayment and project assets serve as collateral for the loan.Long-time negotiation, a wide variety of involved parties and complicated structure lead it to being exposed to many risks and so that it is asked to implement rigid supervision and risk management during the whole financing course .Project finance risk management is the key of success or failure in project finance. How to carry out finance risk management is what every project participator needs to consider carefully. However, the existing problems in this area have greatly restricted it from further development currently. Therefore, it is vital to seek the initiative and effective approach to project finance risk management.This thesis gives the general description on basic concept, usual practice of project finance and risk management, and illustrate the main risks in China ,which are Credit Risk, Completion Risk, Operating cost risk, Technology Risk, Start-up cost Risk, Political Risk, Economic Risk, and Environment-protecting Risk. In risk assessment, the thesis use Monte-Carlo and Matlab on quantitative assessment., and use mark record on qualitative assessment. In view of these risks,the thesis raises the solution, majored in credit. Based on detail analysis, the thesis gives resolutions and relevant suggestions.