Digest Finance
 

The Study into Factors Reducing Investment Project Financing Risks

Vol. 24, Iss. 4, DECEMBER 2019

PDF  Article PDF Version

Received: 13 August 2019

Received in revised form: 27 August 2019

Accepted: 10 September 2019

Available online: 25 December 2019

Subject Heading: RISK, ANALYSIS AND EVALUATION

JEL Classification: G31, G32

Pages: 395–402

https://doi.org/10.24891/df.24.4.395

Khakhanaev U.S.-E. Chechen State University (CHSU), Grozny, Chechen Republic, Russian Federation
desperade@mail.ru

https://orcid.org/0000-0003-1616-2920

Subject The article discusses the issue of revitalizing factors that reduce risks of investment project financing through a new risk classification set forth specifically for investment projects.
Objectives The article represents an empirical study into a new task of investment project financing, that is the identification of the most cost-effective financial sources and generation of cash flows as much as possible. This task requires to build a model for the gradual creation of a risk catalog, classify types of risks, describe risk factors and their impact on an investment process, determine what should be done to find factors reducing the risk of investment project financing.
Methods The study relies upon the Net Present Value (NPV) method, index-based method, comparative analysis, time series analysis.
Results The article presents the outcome of a comprehensive analysis of factors reducing the risk of investment project financing. I propose my own classification of risks identified by group of factors and describe them. The article formulates methodological recommendations to manage risks of investment project financing in an innovative manner and use the relevant tools, i.e. the catalog of factors reducing investment project financing risks.
Conclusions and Relevance There should be the gradual formation of the risk reduction factors catalog and thorough use of recommendations for choosing alternative sources of investment project finance in terms of NPV. The above approaches allow to make reasonable investment decisions in accordance with the existing criteria, such as NPV method, rate of return on investment, reasonable investor’s expenses for keeping its economic potential.

Keywords: investment project, financing, risk, cash flow, risk reduction

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