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Influence of public credit risk on private capital in public–private partnership models

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  • Wei Li
  • Jie Li
  • Siwei Sun

Abstract

Public credit risk is an important factor in private capital's decision to participate in public–private partnership (PPP) projects. We explore why private capital participates in such projects using dynamic game theory. We assess the framework of credit rating agencies assessment of local fiscal risk and construct a measure of fiscal commitment risk and public credit risk evaluation indicators. Using China's provincial panel data from 2013 to 2019, we found that government credit risk reduces private partner participation. Private capital participates in PPP projects for profit if the local government has established good credit awareness and contractual spirit.

Suggested Citation

  • Wei Li & Jie Li & Siwei Sun, 2023. "Influence of public credit risk on private capital in public–private partnership models," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1330-1343, March.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:2:p:1330-1343
    DOI: 10.1002/mde.3750
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    References listed on IDEAS

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