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Authors
Abstract(s)
Project finance which is primarily used to finance public private partnerships (PPPs) has faced deteriorating
credit conditions during the financial crisis. This has ultimately decreased the competitiveness of PPPs
compared to traditional public procurement. This study aims to find out in how far and under which
conditions the forfaiting model which is predominantly used in Germany can be an alternative financing
model for PPPs. For this purpose both models were compared to identify each model’s advantages and
disadvantages. Furthermore, analyzing the financing patterns of PPPs in German building construction from
2002 to 2013 allowed further conclusions about the feasibility of forfaiting. It was found out that most of the
German PPPs are financed by forfaiting. However, large projects are preferred to be financed by project
finance. With the outburst of the financial crisis there was an evident increase in financing under forfaiting.
Credit and market conditions related to project finance worsened considerably. Hence, it is assumed that
projects initially planned to be financed by project finance have been dropped and/or alternatively financed
by forfaiting. Overall it was found out that forfaiting is an alternative financing model for PPPs, not only in
times of crisis.
Description
Keywords
Public Private Partnerships (PPPs) Financing Project finance Forfaiting model Financial crisis Financing costs Risk allocation