The Journal of Structured Finance 

About: The Journal of Structured Finance is an academic journal. The journal publishes majorly in the area(s): Securitization & Structured finance. It has an ISSN identifier of 1082-3220. Over the lifetime, 586 publications have been published receiving 3217 citations.

Framework for Critical Success Factors of BOT Projects in China

Abstract: The impending entry of China into the World Trade Organization is expected to result in immense demand for basic infrastructure. There are great opportunities for project sponsors, especially in the competitive tendering of build-operate-transfer (BOT) projects. However, the road to winning and managing a BOT project successfully in China is not easy. The process is complex, time-consuming, and expensive, and each phase9s success determines the fate of the next phase. Foreign investors must pay attention to the critical success factors (CSFs) in every phase. This article summarizes a study conducted to identify and analyze CSFs of BOT projects in China and their relative importance. Analysis of these CSFs should help foreign investors improve their decision-making process for investing in Chinese BOT projects.

The Subprime Turmoil: What's Old, What's New, and What's Next

Abstract: This article considers the origins of the subprime turmoil and the way the financial system has responded to it. It explains that there are both old and new components in both the origins and the propagation of the subprime shock. Old components include government financial subsidies for bearing risk, accommodative monetary policy, and adverse selection facilitated by asymmetric information. New components include the central role of agency problems in asset management, the ability of financial institutions to raise new capital from external sources, the activist role of the United States Treasury Department and Federal Reserve, and improvements in U.S. financial system diversification resulting from deregulation, consolidation, and globalization. In light of these old and new elements of the origins and propagation of the subprime turmoil, the article concludes by considering the near-term future of financial and macroeconomic performance, and the implications for monetary policy, regulatory policy, and the future of the structure of the financial services industry.

The Economics of Islamic Finance and Securitization

Abstract: Islamic lending transactions are governed by the precepts of the shariah, which bans interest and stipulates that income must be derived as return from entrepreneurial investment. Since Islamic finance is predicated on asset backing and specific credit participation in identified business risk, structuring shariah-compliant securitization seems straightforward. This article explains the fundamental legal principles of Islamic finance and presents a valuation model that helps distil the essential economic characteristics of shariah- compliant synthetication of conventional finance. In addition to a brief review of the current state of market development, the examination of pertinent legal and economic implications of shariah compliance on the configuration of securitization transactions informs a discussion of the most salient benefits and drawbacks of structured finance under Islamic law.

The Last Trillion-Dollar Commitment: The Destruction of Fannie Mae and Freddie Mac

Abstract: The government takeover of Fannie Mae and Freddie Mac was necessary because of their massive losses on more than $1.6 trillion of subprime and Alt-A investments, almost all of which were added to their single-family book of business between 2005 and 2007. The most plausible explanation for the sudden adoption of this disastrous course-disastrous for them and for the U.S. financial markets—is their desire to retain the support of Congress after their accounting scandals in 2003 and 2004 and the challenges to their business model that ensued. Although the strategy worked-Congress did not adopt strong government-sponsored enterprise (GSE) reform legislation until the Republicans demanded it as the price for Senate passage of a housing bill in July 2008—it led inevitably to the government takeover and the enormous junk loan losses still to come. Now that the federal government has been required to take effective control of Fannie and Freddie and to decide their fate, it is important to understand the reasons for their financial collapse—what went wrong and why. That is the purpose of this article.

Improved Techniques for Valuing Large-Scale Projects

Abstract: One of the standard ways to value project finance investments is to discount equity cash flows (ECF) using a single discount rate, he project9s cost of equity (KE). This approach, however, can lead to significant valuation errors when used to value complex investments. In this article, Esty illustrates problems with such an approach and then presents an improved valuation technique called Quasi-Market Valuation (QMV) which solves these problems and reduces the potential for significant errors. In addition, the author discusses two additional valuation tools-Monte Carlo simulation and real options analysis-which address deficiencies in traditional discounted cash flow (DCF) analysis. With the exception of real options analysis, these new techniques and tools are relatively simple to implement using standard spreadsheet software.