Department of Economics2024-11-0920020938-225910.1007/s0019900001592-s2.0-0036003992http://dx.doi.org/10.1007/s001990000159https://hdl.handle.net/20.500.14288/8025A sovereign borrower seeks to raise funds internationally to finance a fixed-size project, which no single lender can finance alone. Lenders cannot lend more than their endowments, which are private information. A coordination failure arises; therefore, some socially desirable projects may not be financed, even if ex post feasible. There are multiple equilibria, and a conflict exists between lenders about which equilibrium to coordinate on. When endowments are volatile, some lenders prefer an equilibrium in which the project is financed with probability p < 1, even if ex post feasible. The government eliminates such equilibria by offering a sufficiently high return, only if endowment volatility is small.EconomicsThe role of lender behavior in international project financeJournal Article1432-0479175091800008Q39009