This paper explores the link between political institutions and the size of global bank loans received to fund project finance (PF) transactions, a commonly used funding method for domestic infrastructure construction. We theorize that lenders’ political risk assessments lead to a prioritization of political predictability over other institutional features of host countries. This indicates that, all else being equal, full democracies and politically closed regimes have advantages in attracting global PF capital, while hybrid regimes are least likely to receive global funds for similar projects. Using the global PF deals reported by the DealScan database and data on political institutions and economic indicators, we show that the relationship between host country regime type and global bank loans is indeed U-shaped. Our additional analysis demonstrates that a greater PF investment is associated with a lower hazard rate of regime failure in host autocracies, particularly in the form of an irregular exit by a dictator. Overall, our findings suggest that global bank loans, mostly originating from economically advanced democracies, contribute to infrastructure funding in dictatorships that might not otherwise be available through domestic or sovereign borrowing channels.

中文翻译：

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政治机构和全球项目融资贷款

本文探讨了政治制度与为项目融资 (PF) 交易提供资金的全球银行贷款规模之间的联系，这是国内基础设施建设常用的融资方式。我们的理论是，贷方的政治风险评估导致政治可预测性优先于东道国的其他制度特征。这表明，在其他条件相同的情况下，完全民主和政治封闭的政权在吸引全球 PF 资本方面具有优势，而混合政权最不可能为类似项目获得全球资金。使用 DealScan 数据库报告的全球 PF 交易以及政治制度和经济指标数据，我们表明东道国制度类型与全球银行贷款之间的关系确实是 U 形的。我们的额外分析表明，更大的 PF 投资与东道主独裁国家政权失败的风险率较低相关，特别是独裁者的非正常退出形式。总体而言，我们的研究结果表明，全球银行贷款（主要来自经济发达的民主国家）有助于独裁统治下的基础设施融资，否则这些贷款可能无法通过国内或主权借款渠道获得。