European Project Finance through Shadow Banking: Under Construction and on Budget
There was much concern in 2012-2014 about the risks to the bank finance sector from the pending introduction of Basel III regulations which would force banks to increase the amount of regulatory capital required and utilise longer term, stable funding.[1] In particular for project finance (“PF”), this was expected to lead either to a withdrawal of banks from PF lending business and/or would force banks to increase their margins charged to projects for such loans.[2] Either case was seen as creating or increasing a space in the PF market for institutional investors to participate as financial intermediators thereby surpassing or replacing traditional PF banks. Such institutional investors are not lending banks, they do not face the regulatory requirements of Basel III (and its predecessors) and are commonly referred to as part of the shadow banking community, i.e. nonbank entities acting like banks and providing credit direct to traditional banking customers but without the banking regulatory oversight. The global financial crisis of 2007/08 (“GFC”) exposed weaknesses in the commercial lending sector which spread widely throughout the finance industry, including shadow banks, and to consumers; Basel III was introduced to provide resilience to banks against both short-term and sustained future crises, so as to prevent another global financial crisis. This article critically analyses the risks of nonbanks participating in the European project finance market and which are not regulated by Basel III to determine whether existing controls on these shadow banks are sufficient and whether further regulation is required.
In Section I, this article will recap on the GFC and one of the key objectives of the subsequent introduction of Basel III, namely the protection of the overall banking sector through increasing resilience in individuals banks. The fundamental raison d'être of a bank is maturity transformation, taking cash deposit liabilities and turning them into loan assets. The GFC exposed the mortgage lending sector as diverging from this fundamental role where there was (a) wholesale risk transfer of mortgage lending through securitisation, which was (b) facilitated by means of extremely short-term borrowing, even just overnight. As the housing market crashed, mortgage arrears accumulated and confidence within the finance community fell leading to a withdrawal of short-term liquidity, and many institutions were left exposed and insolvent.
In Section II, the article will establish which entities are active in project finance lending, both banks and nonbanks i.e. institutional investors (“II”) such as pension funds, focussed debt or infrastructure funds which can be traded, or insurance companies. Going deeper, this article will also describe the different role and drivers of II participation within project finance, also known as “alternative investments” which is the investment industry’s classification for infrastructure lending. In the final Section, this article will argue that the shadow banking sector in PF does not represent a systemic risk as was exposed in the GFC and therefore should not be subject to the same regulation as lending banks such as those in project finance. This issue is particularly important now as governments, faced with a global economic malaise resulting from Coronavirus, have highlighted infrastructure spending as a key route to restart economies; the UK government, in particular, has pledged to invest over £600 billion in public sector infrastructure over the next five years.[3] Introducing new regulation on shadow banks that lessens project finance lending capacity or increases its costs would impact state initiatives to get infrastructure projects off the ground which would ultimately impact job creation, reducing the flow of wealth into the community and subsequent consumer spending, contributing to a delay in rebuilding and repairing the local economy.
This article will take a pan-European focus as financial intermediation in Europe is much more bank focussed whereas in the US it is debt securities that are dominant.[4] This in turn creates a bank-oriented regulatory focus in Europe and the implementation and monitoring of Basel III is therefore key for European banks. Moreover, given the prevalence of banks within Europe, the PF market will be much more susceptible to shadow banking acquiring market share from commercial lenders. Finally, this article will utilise “project finance” and “infrastructure debt” interchangeably.
I. Basel III and Improving the Resilience of the Global Banking Industry
Much has been written about the GFC to explain its root causes and its subsequent global impact. The starting point is the United States, which attracted significant foreign capital to fund current account deficits, whilst promulgating a low interest rate environment in the aftermath of the tech stock crash of 2000; this helped fuel a dramatic increase in house prices.[5] The housing market bubble was also fuelled by an increasing supply of mortgage lending. The traditional model where the lending bank assessed the credit risk of the borrower and then held the loan for its duration was replaced by an “originate to distribute” model whereby bank lending capacity was increased by offloading mortgages to investors in search of yield.[6] Now lenders were perversely being rewarded by the quantity of lending that could be achieved and no longer needed to worry about the credit quality or default risk of a borrower.[7] Lenders in search of more business were driven to accept borrowers of lower and lower credit quality, or what became known as “subprime” borrowers. The offloading of loans by lenders was made possible by, and exacerbated by, securitisation: quantities of mortgage debt were pooled, sliced into different risk tranches then turned into securities with credit ratings, all ready to be sold on.[8] Without a full understanding of the risks, international investors purchased these high-risk, high-yield financial assets and as such ‘non-US financial intermediaries became exposed to the US subprime mortgage market crisis’.[9]
Hidden underneath this production line of mortgage lending was a growing maturity disparity between assets and liabilities of the financial participants. Brunnermeier states there were two triggers for the start of the GFC, firstly the original lenders offloaded the credit risk through the mortgage backed securitisations, and secondly there was a critical mismatch between the short term funding (as short as overnight) being used for issuing long term loans, exposing the financial participants to any loss of funding liquidity.[10] With the increased distance between borrowers and the ultimate (dispersed) lenders and the chain of different financial products in between, there was increasing information gaps, particularly on the quality of the underlying assets.[11] Confidence between financial market participants is key for a healthy financial system and a ‘veil of ignorance’ on the quality of banks’ balance sheets pervaded the financial markets.[12] As Judge goes on to argue, these information gaps were a key issue in the GFC which led to “runs” by liquidity providers which were not always based on market fundamentals, i.e. there was over-reaction by financial participants because they lacked sufficient information.[13] Facing an absence of liquidity, banks were then forced to sell assets at ‘dislocated prices’ to free up capital which in turn precipitated falls in the value of similar assets held by other banks, leading to a downward spiral, or ‘fire sales’, of assets.[14] On the day that Lehman Brothers filed for bankruptcy, it was short EUR 5.5 billion in cash to refinance short-term credit lines that were maturing and which were not being renewed by its lenders.[15] US security-issuing institutions were increasingly borrowing on a short-term basis funded through commercial paper issuances, sale and repurchase agreements and the interbank money markets including international lenders.[16] Unchecked, the financial markets around the globe had become critically interconnected, and as Benanke surmised ‘financial disruptions do not respect borders’.[17]
The Basel Committee of Banking Supervision (“Basel Committee”) introduced Basel I in 1988, a set capital standards for the banking industry which sought to introduce best practice to banks in developed economies, and to create ‘a more efficient, productive, and robust banking system’.[18] Basel II was subsequently introduced in 2004 to further refine and strengthen Basel I, and although both Basel I and Basel II were non-binding, they ‘were widely adopted by member countries of the Basel Committee, as well as by many non-member countries’.[19] Following the global financial crisis however, it was clear that more work was needed and the Basel Committee set to introducing Basel III. In its 2010 paper, the Basel Committee laid out 10 recommendations to create a global approach to future financial disruptions and to address a variety of capital standards worldwide which were exposed by the GFC.[20] As Miele & Sales state, a two-dimensional approach was needed by Basel III, ‘focusing on the individual banks, as well as on the financial system as a whole’.[21]
For individual banks, Basel III meant increasing resilience through increasing and improving equity capital as a percentage of risk-weighted assets (“RWA”) and introducing a leverage cap and minimum liquidity requirements. Whilst the overall total Tier 1 and Tier 2 capital requirement was unchanged at 8.0% of RWA, Basel III increased the common equity proportion to 4.5%; in addition a capital conservation buffer of 2.5% of RWA was introduced which in effect lifted the total capital requirement of banks from 8.0% to 10.5% of RWA. The Basel Committee saw the higher common equity capital of the bank, which comprised share capital and retained earnings (profit), as better able to absorb credit losses.[22] In addition, Basel III introduced a simple, non-risk based leverage ratio to ‘constrain the build-up of leverage in the banking sector’.[23]
In addition to the above two balance sheet measures, and to address the liquidity risk issues highlighted by the GFC, Basel III introduces two new liquidity ratios, the Liquidity Coverage Ratio (“LCR”) and the Net Stable Funding Ratio (“NSFR”). The LCR is focussed on a one-month stress event where wholesale funding would not be available and it identifies the required amount of unencumbered, high-quality, liquid assets that would be needed so as to allow the bank to still be able to meet cash outflows.[24] Alternatively the NSFR is focussed on a longer period, seeking to reduce maturity mismatch between assets and liabilities and to limit ‘overreliance on short-term wholesale funding’.[25] According to King, the NSFR ‘pushes banks to fund long-term illiquid assets with long-term capital’.[26]
Basel III is prescriptive and it forces banks to make decisions about the assets they hold on the basis of their capital, and thus Basel III affects both sides of a bank’s balance sheet. On the liabilities side, Basel III forces a move away from short-term borrowing to more stable, long-term funding. On the asset side, banks are penalised less for holding assets with greater liquidity and lower risk weighting. Whilst creating banks with more resilience, the trade-off is an increased weighted cost of capital arising from the higher regulatory capital requirement leading to a reduction in bank profitability.[27] Moreover, by restricting the maximum RWA that a bank may hold under Basel III, it may lead to some banks withdrawing from or reducing certain lending products until further regulatory capital can be raised.
The effects of Basel III can be seen in the graph below. Banks have increased their use of retail deposits for funding which are considered ‘sticky’ under Basel III and attract lower risk weightings.[28] At the same time, it can be seen that banks are reducing their reliance on the less stable wholesale interbank market, with particularly notable changes between 2008 and 2016, i.e. after the GFC. In addition it can be seen that banks have increased the amount of equity on their balance sheets since the GFC.
Breakdown by category of banking sector financial liabilities of Euro area (%)[29]
In sum, and following on from the GFC, Basel III regulations introduced asset and liability constraints on regulated banks making certain borrower types less attractive. This translates into higher lending margins to maintain profits and/or the possible reduction in lending to long-term illiquid borrowers.
II. Project Finance increasingly funded by the Shadow Banking Sector
Project finance is a specialised financing application which the Basel Committee describes as ‘a method of funding in which the lender looks primarily to the revenues generated by a single project, both as the source of repayment and as security for the exposure’.[30] Project finance differs from corporate finance whereby a single-use, special purpose vehicle (“SPV”) is set up specifically for the investment and there is no recourse to the project’s sponsors – both debt and equity investors must rely on the SPV’s cashflows for servicing their investments. Project finance is typically used to finance large, capital-intensive public infrastructure such as power stations, bridges, railways, toll roads, prisons, schools and hospitals. There is a high amount of structuring in PF to allocate risk away from the SPV to third parties who can price it more efficiently, leaving the borrower, typically without employees, with little residual risk, as shown typically below.
Typical Project Finance Structure[31]
The nature of this type of public infrastructure is that it has one customer, or type of customer and relatively inelastic demand. Such infrastructure is therefore regarded as a monopoly or quasi-monopoly, with long-term revenues where inflation can be passed on to the customers.[32] The revenues streams, reflecting the monopoly position of infrastructure are either regulated or fixed under long-term contract, such as with the state or a large creditworthy customer, perhaps an electricity supply company. This firm underwriting of the future revenues is important to support the large upfront capital investment. By way of example, the UK government underwrote a 35-year power purchase contract to incentivise EDF of France to finance the construction of the Hinkley Point C nuclear power station.[33] The underwriting of the future revenues streams means that these assets can support high amounts of debt, typically 70-90% of the capital costs.[34] The high levels of debt can be repaid over long periods averaging 12-19 years supported by the long-term revenues streams.[35] Traditionally these infrastructure investments were funded by the state but are now increasingly privately funded.[36] Both debt and equity investors are attracted to the monopoly position and lack of market risk exposure, plus the long-term stable revenues.
On the debt side, infrastructure has traditionally been financed by long-term bank loans.[37] The required time to structure and originate the debt has led to a necessary close relationship between the lenders and special purpose borrower; PF banks require a specialist team for the upfront risk assessment and structuring of the transaction and particularly managing the construction risk which entails multiple loan drawdowns as construction milestones are met and waivers granted by the banks for dealing with unforeseen construction issues and cost or time overruns.[38] The close relationship reduces information asymmetry and facilitates rapid reaction of the banking team to manage construction risk to get large infrastructure projects into the relatively safer harbour of operations. Banks providing project finance therefore have high operational costs compared to ordinary corporate lending, and costs are further increased under Basel III. McNamara and Metrick estimate that project finance loans require matched stable funding of 65-100%; given the length of project finance loans this translates into a high amount of long-term stable financing that is required by the bank to match the project finance asset.[39] Ma goes on to state that as a result of Basel III, many banks are either withdrawing from the project finance market or instead offering shorter debt repayment tenors.[40]
In the European project finance market, and more generally in the European financial intermediation sector, commercial bank lending in the Euro area been falling with increasing market share being taken by nonbank entities as show in the figure below. As of 2019 the sources of funding were more balanced with the share from commercial banks (shown as “credit institutions”) having fallen below 40% with nonbanks (shadow banking) making up almost 60% of financial intermediation.
Shares of different types of financial intermediaries in the Euro area (1999-2019)[41]
Within this increase in the provision of nonbank debt, there has been a noticeable increase in fundraising specifically targeting infrastructure debt and following the GFC the sector has grown to over $20 billion for 2020, as shown in the figure below (noting that infrastructure debt is combined with real estate).
Private Debt Fundraising by Type (in USD billions)[42]
Private debt investment of infrastructure can take the form of project bonds (listed or unlisted) or direct lending to a project, either alongside commercial lenders or, more increasingly, in replacement of them.[43] Typical private debt providers are pension funds, insurance companies or specialist collective investment vehicles (listed or unlisted) who are attracted to the long-term inflation linked returns which can match equally long-dated liabilities, particularly in the case of insurance companies and pension funds.[44] Such private debt providers sit outside the regulatory perimeter which encircles commercial lenders and specifically the Basel III capital and liquidity regulations that apply to banks.
In conclusion, there has been an increasing involvement of non-banks in the European project finance sector, resulting in a falling market share for commercial banks. As these nonbanks fall outside the scope of Basel III, and in particular, avoid the latest capital and liquidity regulations, it would appear that lower cost of private debt compared to commercial lenders allows them to win market share in the European project finance sector. This raises the question as to whether the lack of regulatory oversight is creating a possible future problem to be borne by society like the GFC.
III. No Need for Regulation of Shadow Banking Participating in Project Finance Lending
The main question being considered in this article is whether the increasing shadow banking participation in the project finance sector is cause for concern and thus requires some regulatory intervention to curb overexpansion of this sector which could create a future financial crisis. This section of the article, however, will argue that regulation of shadow banking participants in the project finance sector is not required, nor should be introduced, for the following six reasons:
(i) Project finance is a relatively limited market;
(ii) There is a lack of market risk or volatility of the underlying asset
(iii) Maturity mismatch is much reduced;
(iv) There is limited liquidity risk;
(v) Sufficient external and internal self-regulation already exist; and
(vi) There are no unsound or perverse incentives to be realigned
As previously mentioned. the project finance sector is a very specialised lending sector and whilst the source of funding infrastructure is moving to nonbanks it does not mean that the much needed discipline and expertise of the finance structurers and originators is deteriorating. This author would go further and say that the uptake of nonbanks in funding infrastructure is a positive development as there is a natural fit and symmetry between infrastructure cashflows and shadow bank funding sources. If the purpose of finance regulation is a grand bargain – upfront social costs through higher credit costs & more banking supervision to ward off future higher social costs of bailouts following a financial crisis – I would argue that the project finance sector and its specialist traits impose its own externalities and control on the nonbank participants and a broader intervention from regulatory supervisors is not required.
A. Limited Market Size
By its nature, infrastructure deals are capital intensive but they are also infrequent. It is not very often that a country needs a new dam, prison or power station. According to the Infrastructure Journal proprietary database, there were only 154 project financings successfully closed across all of Europe in 2020 (ignoring refinancings) totalling $34.6 billion.[45] Compare this to US housing loans where in 2007, US commercial banks held $930 billion in residential mortgage backed securities.[46] Project financed infrastructure is a niche sector and given the limited market size, there is not room, nor space, for extensive new entrants which could create a bubble such as seen in the US subprime market leading up to the GFC.
B. Limited Market Risk
As described above project financing is typically utilised for infrastructure which enjoys a monopoly position vis a vis its customers.[47] The infrastructure asset and hence the cashflows received by the SPV are not typically exposed to market dynamics unlike the subprime mortgages which were exposed to house price falls and whose defaults triggered the GFC. Project finance is structured in such a way as to avoid market risk and this allows for the high debt leverage levels. An example from last year from the Infrastructure Journal database is the 400MW Oyfjellet windfarm in Norway which secured EUR 275 million of project financing with a repayment period of over 19 years backed by (initially) a 15-year power purchase contract with local aluminium smelter Alcoa Norway.[48]
C. No Maturity Transformation
At its simplest level, a bank effects a maturity transformation from cash deposits provided to it into long-term loans provided to corporate and retail customers. Allen et al refer to the ‘customer funding gap’ which is the difference between the loans a bank makes and the deposits it has taken from customers.[49] Basel III, whilst supporting the fundamental role that commercial banks play within society, seeks to target the different products of banks in an effort to improve resilience in the banking sector. Specifically with regards to project finance it seeks to match the long-term loan assets held by banks with long-term stable funding sources such that there is minimal “customer funding gap”, forcing banks away from maturity transformation in project finance. Institutional investors on the other hand do not need this regulatory intervention as there is a natural match in investment horizons, particularly with pension funds and insurance companies that have long term liabilities. Project financed infrastructure exhibits many of the features of government securities that pension funds traditionally purchased, but is often a type of off-balance sheet government financing, i.e. where the government is the sole customer (such as for social infrastructure like schools, prisons, hospitals, etc) then the revenue risk is still effectively high investment grade government-linked.
D. Limited Liquidity Risk
The nature of IIs, such as pension funds and insurance companies, participating in project finance, facilitate a long-term investment horizon. In some cases there is a restriction on early redemptions, for example pension funds whereby (i) investors are legally limited as to when funds can be withdrawn and/or (ii) funds are withdrawn to match the required funding of investor lifestyles. Insurance companies will have claims payouts every year which are relatively inelastic. Compare this with the forced “fire sales” in the GFC which accelerated the liquidity crunch.
The exception to this general long-term view are special purpose debt funds where investors may have short or long term investment horizons. In particular, distinction must be drawn between open-ended and closed-ended investment vehicles. With the latter, the investor capital is fixed and investors exit closed-ended funds through secondary sales of their investment. The insertion of a closed-ended, fixed capital vehicle between the investors and the debt financing of infrastructure provides a “break” in the contagion/inter-connectivity of participants in the financial intermediation, and prevents a “run” of investor exits. Conversely, with regards open-ended investment vehicles, the investment capital is variable and can be increased or decreased, and investor exits (redemptions) are financed by the vehicle itself. Ultimately in the case of significant investor outflows, this would need to be funded by asset sales. There are parallels here with the forced asset “fire sales” during the GFC to meet liquidity shortages but for the all reasons mentioned above (market size and lack of market risk), it is highly unlikely that there would be a “run” on an infrastructure fund. Moreover, from a review of the top five infrastructure debt fundraisings in 2020, and a review of the actual infrastructure debt vehicles, four (of the five where information was available) were closed-ended investment vehicles, thus acting as a block to investor withdrawals of capital.[50] Additionally, investment managers of these private debt investment vehicles can restrict investor redemptions through imposition of withdrawal ‘gates’ to prevent maturity mismatches and potential liquidity runs.[51]
E. Sufficient External and Internal Regulation Exists
Existing external regulation of private debt investment vehicles active within the EU falls under the Alternative Investment Fund Managers (“AIFM”) directive or the Undertakings for Collective Investment in Transferable Securities (“UCITS”) directive. Introduced within the EU in 2011, the AIFM directive heralded the first time that pan-European regulation of the shadow banking sector was attempted.[52] Whilst the European Commission did not blame the nonbanks for the GFC, it was nonetheless believed that the shadow banking sector helped spread risk more broadly across the financial sector.[53] Private infrastructure debt funds active within the EU fall under the AIFMD and whilst the breadth of this directive is beyond the scope of this article, it is nonetheless worth noting that AIFMD regulates the managers of the Alternative Investments Funds (“AIFs”), but not the AIFs themselves.[54] In particular, the managers of AIFs are required to employ adequate risk management (due diligence, monitoring and consistency with the stated investment strategy) and liquidity management systems, particularly for open-ended AIFs. Conversely, the UCITS directive applies to open-ended investment vehicles specifically for retail investors; as such UCITS-qualifying funds have strict limitations on investing in transferable securities or money market instruments with a focus on liquidity, with a limit of 5% to be invested in any single non-financial institution and a maximum of 10% for non-qualifying investments.[55] There is therefore limited scope for UCITS-compliant funds investing in illiquid project finance debt.
Given that the institutional investors funding PF transactions represent a broad swathe of the community (public and private pension funds in particular), a significant focus of these funds is on highly liquid, high investment grade government bonds. The participation of these funds in infrastructure debt transactions is limited through the internal governance of these funds, as emphasised by the AIFM directive, resulting typically in only a 5-10% allocation of the total funds’ investment commitments as shown in the figure below. Moreover it is worth noting that the various institution categories listed below are not actually achieving their target allocations.
Breakdown of Average Current/Target Allocation to Infrastructure by Investor Type[56]
F. No Unsound or Perverse Incentives
As mentioned previously, project financing is a highly specialised type of lending and the expertise and systems required to arrange and monitor project finance loans present a high barrier to entry for nonbanks. Also, as Miele and Sales state, financial intermediation often suffers from asymmetric information leading to adverse selection and moral hazard both of which were evident in the GFC.[57] In the case of adverse selection, the securitised mortgage obligations of subprime borrowers placed a great deal of distance and information interfaces between the end borrower and the final financier. Whilst investors in these securities thought that the credit risk was managed through structuring, credit ratings and credit default swaps, the GFC showed that it was not and mortgage lending to poor quality borrowers ultimately led to institutions like Lehman Brothers collapsing. In the case of moral hazard, and as mentioned above, mortgage lenders in the lead up to the GFC were incentivised to ‘originate and distribute’ housing loans rather than assess the borrower’s credit quality, lend and hold the loan to maturity. In project finance there is a close and long relationship between the borrower and loan originator particularly in the structuring and origination of the loan which, in this author’s experience can take a minimum of 6 months and often much longer. Moreover, there are high levels of debt governance within the loan agreement typically including regular reporting to the lender, both during construction and operations. This substantially reduces the information asymmetry between the borrower and the financier, thus mitigating adverse selection and moral hazard.
In sum, given the limited market for PF, the stable and predictable long-term cashflows from project financed infrastructure, the lack of maturity and liquidity mismatch with PF provided by IIs, the existing external and internal regulation and the alignment of incentives, it is argued that there is no need for further regulation of the shadow banking sector participating in project financing transactions.
Conclusion
The global financial crisis of 2007/08 led to the introduction of Basel III regulations for banks which would force them to increase the amount of regulatory capital required and utilise longer term, stable funding. For project finance, which creates long-term illiquid assets, the Basel III regulations were expected to either lead to a withdrawal of banks from the project finance lending business and/or would force banks to increase their margins charged to projects for such loans. This article has shown that whilst project finance from commercial lenders has decreased, institutional investors have filled the gap through significant loan advances to the infrastructure debt sector. Such institutional investors are not lending banks, they do not face the regulatory requirements of Basel III (and its predecessors) thus giving them an advantage against commercial banks who fall under the Basel III requirements. This article set out to critically analyse the risks of non-banks participating in the European project finance market to determine whether existing controls on these nonbanks is sufficient and whether further control via regulation is required.
This article argues that, for the reasons outlined above, additional regulation of the shadow banking participants in project finance is not necessary; conversely there is arguably a much better fit with institutional investors such as pension funds for holding infrastructure debt rather than commercial banks. For this reason, it is hard to see a future financial crisis arising from the participation of shadow banks in project finance; such reasons supporting this hypothesis include the limited market size for infrastructure debt, project financed infrastructure generate stable and predictable cashflows with little or no external market risk, shadow bank financing of infrastructure does not give rise to either a maturity or liquidity mismatch, there is already sufficient external and internal regulation of nonbank project finance vehicles, and the close lender-borrower relationship giving better alignment of incentives. As Nabilou and Prum state, ‘[t]he overarching rationale for
[1] Michael R. King, ‘The Basel III Net Stable Funding Ratio and bank net interest margins’ (2013) 37 Journal of Banking & Finance 4155
[2] Tianze Ma, ‘Basel III and the Future of Project Finance Funding’ (2016) 6/1 Michigan Business & Entrepreneurial Law Review 119
[3] HM Treasury, <https://www.gov.uk/government/publications/build-back-better-our-plan-for-growth/build-back-better-our-plan-for-growth-html>, accessed 10 April 2021
[4] Lucrezia Reichlin, ‘Monetary Policy and Banks in the Euro Area: The Tale of Two Crises’ (2014) 39 Journal of Macroeconomics 391
[5] Franklin Allen and Elena Carletti, ‘An Overview of the Crisis: Causes, Consequences, and Solutions’ (2010) 10:1 International Review of Finance 2
[6] Markus K. Brunnermeier, ‘Deciphering the Liquidity and Credit Crunch 2007–2008’ (2009) 23/1 Journal of Economic Perspectives 81
[7] Allen & Carletti (n5) 3
[8] Ibid 3-4
[9] Ricardo Cabral, ‘A perspective on the symptoms and causes of the financial crisis’ (2013) 37 Journal of Banking & Finance 110
[10] Brunnermeier (n6) 79
[11] Kathryn Judge, ‘Shadow Banking and Information Gaps’ (2017) 103/3 Virginia Law Review 467
[12] Paul J. J. Welfens, ‘Banking crisis and prudential supervision: a European perspective’ (2008) 4 International Economics and Economic Policy 352
[13] Judge (n11) 462
[14] Andrei Shleifer and Robert Vishny, ‘Fire Sales in Finance and Macroeconomics’ (2011) 25/1 Journal of Economic Perspectives 30
[15] Gary Gorton, Andrew Metrick and Lei Xie, ‘The flight from maturity’ (2020) Journal of Financial Intermediation 1
[16] Ibid 1
[17] Speech given at the Conference on Brookings Papers on Economic Activity by Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System, on 15 September 2009 1
[18] Cabral (n9) 108-109
[19] Narissa Lyngen, ‘Basel III: Dynamics of State Implementation’ (2012) 53/2 Harvard International Law Journal 519
[20] Basel Committee on Banking Supervision, ‘Report and Recommendations of the Cross-border Bank Resolution Group’ dated March 2010 1-3
[21] Maria Grazia Miele and Elisa Sales, ‘The financial crisis and regulation reform’ (2011) 12/4 Journal of Banking Regulation 291
[22] Basel Committee on Banking Supervision, ‘Basel III: A global regulatory framework for more resilient banks and banking systems’ dated Dec 2010 1-2
[23] Ibid 61
[24] King (n1) 4146
[25] Basel Committee on Banking Supervision, ‘Basel III: the net stable funding ratio’ dated Oct 2014 1
[26] King (n1) 4146
[27] Ibid 4144
[28] Ibid 4147
[29] European Central Bank, <https://www.ecb.europa.eu/pub/fie/html/ecb.fie202003~197074785e.en.html> accessed 3 April 2021
[30] Basel Committee on Banking Supervision, ‘International Convergence of Capital Measurement and Capital Standards’ dated June 2004 43
[31] Maarten Wolfs and Shane Woodroffe, ‘Structuring and Financing International BOO/BOT Desalination Projects’ (2002) The Journal of Structured and Project Finance 21
[32] Wouter Thierie and Lieven De Moor, ‘The characteristics of infrastructure as an investment class’ (2016) 30/2 Financial Markets and Portfolio Management 280-281
[33] Department for Business, Energy & Industrial Strategy, ‘Hinkley Point C’ announced 29 September 2016, < https://www.gov.uk/government/collections/hinkley-point-c> accessed on 23 March 2021
[34] OECD, ‘Infrastructure Financing Instruments and Incentives’ dated 2015 16
[35] Wouter Thierie and Lieven De Moor, ‘Loan tenor in project finance’ (2019) 12/3 International Journal of Managing Projects in Business 832
[36] OECD (n34) 7
[37] Christian M. McNamara and Andrew Metrick, ‘Basel III G: Shadow Banking and Project Finance’ (2014) Yale School of Management 6
[38] David J. Park, ‘Remembering Financial Crises: The Risk Implications of the Rise of Institutional Investors in Project Finance’ (2018) 117:383 Michigan Law Review 399
[39] McNamara & Metrick (n37) 7
[40] Ma (n2) 118
[41] European Central Bank, <https://www.ecb.europa.eu/pub/fie/html/ecb.fie202003~197074785e.en.html> accessed 3 April 2021
[42] J.P Morgan Asset Management, ‘Guide to Alternatives’ 28 Feb 2021 < https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/guide-to-alternatives/mi-guide-to-alternatives.pdf> accessed 22 March 2021
[43] Park (n38) 386
[44] OECD (n34) 15
[45] Infrastructure Journal database, <https://ijglobal.com/> accessed 9 April 2021
[46] Adrian Blundell-Wignall, ‘The Subprime Crisis: Size, Deleveraging and Some Policy Options’ (2008) Financial Market Trends, OECD, < https://www.oecd.org/daf/fin/financial-markets/40451721.pdf> accessed 10 April 2021 11
[47] Ron Bird, Harry Liem and Susan Thorp, ‘Infrastructure: Real Assets and Real Returns’ (2014) 20/4 European Financial Management 803
[48] Infrastructure Journal database, <https://ijglobal.com/> accessed 10 April 2021
[49] Bill Allen, Ka Kei Chan, Alistair Milne and Steve Thomas, ‘Basel III: Is the cure worse than the disease?’ (2012) 25 International Review of Financial Analysis 160
[50] Infrastructure Investor, <https://www.infrastructureinvestor.com/infrastructure-debt-15-the-top-5/> accessed on 10 April 2021
[51] Stephen Connolly, ‘When overseeing becomes overlooking: the post-GFC reconfigurations of international finance’ (2016) 16/2 Journal of Corporate Law Studies 413
[52] Marco Bodellini, ‘Does it still make sense, from the EU perspective, to distinguish between UCITS and non-UCITS schemes?’ (2016) 11/4 Capital Markets Law Journal 530
[53] Rodrigo Olivares-Caminal and Marco Bodellini, ‘The UK regulation on alternative investment fund managers:
a difficult compromise between two different legislative approaches’ (2017) Journal of Banking Regulation 75
[54] Council Directive 2011/61/EU of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 [2011] OJ L174/2, recitals 6 & 10
[55] Council directive 2009/65/EC of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) OJ L302, Chapter VII
[56] Barings LLC, ‘Infrastructure Debt: Accessing The Opportunity’ dated May 2018 < https://bwebprod.blob.core.windows.net/assets/user/media/Infrastructure_Debt_Accessing_the_Opportunity.pdf> accessed on 24 March 2021
[57] Miele & Sales (n21) 286