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Policy research working paper 8373
Inhalt:
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
Weitere Ausg.:
Erscheint auch als Druck-Ausgabe Jobst, Andreas A Credit Risk Dynamics of Infrastructure Investment: Considerations for Financial Regulators Washington, D.C : The World Bank, 2018
Sprache:
Englisch
Schlagwort(e):
Graue Literatur
DOI:
10.1596/1813-9450-8373
URL:
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Mehr zum Autor:
Jobst, Andreas A.
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