Assessment of Factors of Influence on the Level of Credit Risk and Profitability for Banks of Project Financing

For the implementation of large-scale projects in various countries of the world, an alternative form of lending is developing - project financing. In the modern world, project financing means financing large, cost-effective projects by servicing debt instruments using the funds generated by the project itself. One of the key participants in project financing are banks, which are largely different from universal ones. Due to their specifics, they can take part in the implementation of the project, from the moment of its planning to the moment the final product enters the market. The very activity of project financing banks is fraught with a huge number of risks, including, most importantly, the risk of non-return of funds to lenders, in other words, credit risk. The work examines in detail the “new” form of lending - project financing, methods for its implementation and participants, including banks. Empirical studies on the risks associated with project finance transactions are also reviewed, with particular emphasis on credit risks. A separate emphasis is placed on a review of the concept of bank profitability, factors and methods for its assessment. Finally, the results of a study on the factors influencing credit risk and profitability of project financing banks are presented.