Post-crisis regulatory reforms haven’t hampered the market for infrastructure finance, finds a report published Tuesday from the Financial Stability Board (FSB).
The report examines the impact of reforms in the wake of the crisis on infrastructure finance, such as corporate and project debt financing. Measures such as the increase in capital and liquidity requirements as part of Basel III and over-the-counter (OTC) derivatives market reforms have not had “material negative effects on the provision and cost of infrastructure finance,” the report says.
The quantity of infrastructure finance has grown in recent years, the report says, following a temporary drop during the crisis; and, lending spreads have declined, reversing a spike that emerged during the crisis.
Among other things, the report finds that market-based financing has replaced some bank financing in advanced economies, and that the G20 banking reforms may have been one of the drivers for this rebalancing.
“The reforms have contributed to shorter average maturities of infrastructure loans by global systemically important banks,” the report says. “This effect is not necessarily unintended, given that reducing banks’ maturity mismatch was one of the objectives of the reforms.”
Overall, the effect of the reforms is secondary compared with factors such as the macro-financial environment, government policy and other institutional factors, the report finds.