The study investigates the motives and objectives of borrowers, lenders and host developing countries in adopting the strategy of Project Finance (PF) when financing a major petroleum project. The overall aim of the study is to develop the empirical basis for a PF theory and to assess its relevance for the less developed countries. The methods of investigation include literature review, desk research, development of case studies and field survey. The study analysed data relating to a large sample of LDC petroleum projects and organised direct interviews with major international institutions. It also organised a mail questionnaire survey which was designed to test its assertions and hypotheses relating to PF strategies. It is shown that project finance can be explained in terms of an eclectic theory which draws its premises from innovations on proven investment, financial and risk concepts. It is also shown that project finance theory represents a system which has its own causes, mechanisms of risk hedging, predictive functions and strategic advantages. In the future, the market for project finance is expected to continue its growth and be strengthened through further financial innovations. The subject is expected to grow even more important both as a proven tool for the investment and financing strategies of host developing countries and as a theory of direct bank participation in major projects located in less developed countries. This study addressed the needs of bankers and industrialists who wish to diversify their business internationally through PF participation in major LDC projects. The study should also be of interest to students of international investment and finance who wish to advance the subject through further research.

The Kuwaiti economy has witnessed remarkable changes especially since the oil boom in the 1970s. Kuwait is one of the world's richest countries in terms of GNP per capita (WBA, 1997). However, the country has hitherto been entirely dependent on oil exports and as petroleum prices increased during the 1 970s, imports also increased. The government undertook a major industrial development program (such as manufacturing industries including cement and other building material, petrochemicals, plastic products and boats). With Iraq's invasion of Kuwait in the early 1 990s, much of the infrastructure of the country was ruined. Post-war Kuwait faced serious problems including shortages of food, fresh water, and electricity, oil well fires and the resulting environmental damage. It is vital for Kuwait to have a thriving and efficient financial system that helps meet the country's developmental and investment targets. The country has two types of financial institutions Islamic and conventional, both of which exist side by side. Both types of institutions take part in investing in the country to improve the infrastructure and industrial base of the economy. Therefore, a successful financial system can only bode well for the country as a whole. In this study, we evaluate the performance of Islamic banks by analyzing their financial indicators and comparing them with those of conventional, commercial banks. This will lead to a better appreciation of advantages and disadvantages of Islamic banking institutions, as well as their efficiency as compared to that of the conventional banks. For this purpose we conduct a case study of the Kuwait Finance House, which runs its activities according to Islamic principles, and also the National Bank of Kuwait, which is the leading conventional bank in Kuwait - comparing and assessing their structure and performance. Both case studies are carried out by examining the differences in their respective internal and external environments and the way they affect financial behavior; our hypotheses are: (1) Islamic financial institutions are on par with traditional (commercial) banking institutions in securing funds; (2) Islamic financial institutions are on par with traditional (commercial) banking institutions in performance and efficiency. (3) Clients' religious attitudes are not the only (or primary) reason behind the success of such institutions in securing funds; (4) legal restrictions imposed on such institutions do not constitute an obstacle against their ability to compete in the tough financial market. In the light of the above evaluation, the nature of the difference in the framework of assets and liabilities between the two types of banks is discerned. We also seek an understanding of the effect of the difference in the nature of revenues earned by both types of institutions - on its framework and management.

The movements of share prices has long been of interest to both academic researchers as well as market practitioners. The statistical research in this field dates back to the work of Bachelier (1900) and there have been many approaches adopted subsequently. This thesis considers a Bayesian approach to multivariate forecasting of financial time series based on dynamic linear models. We will also consider the forecasting of the returns distribution using stochastic volatility models. We will then look at combining these two model structures. We will also demonstrate how the posterior forecast distribution can be simulated and how this may be used directly in order to implement a fully Bayesian decision theoretic approach to selection of optimal stock portfolios. These methods are first illustrated on simulated data and then applied to real data for selected shares from the Standard and Poor 500.

In this thesis I combine VAR forecasting methods with the Campbell-Shiller log-linear approximation to the present-value formula for stock prices. Four aspects of UK stock market behaviour are studied. The first analysis involves decomposing the variance of the unexpected stock return into components due to news about dividends, news about future returns, and the covariance between the two. I find that changing expectations about future returns accounts for around four times as much of the variance of unexpected returns as news about dividends, with a negligible covariance term. My second study is a detailed analysis of the links between macroeconomic risks and required stock returns. Using 27 industry-based stock portfolios, I attempt to determine the effect that a number of macroeconomic and financial factors have on expectations of dividends, real interest rates and future required returns. The results go some way to explaining why some risk factors appear not to be significantly priced in financial markets, whilst others (particularly inflation) appear to induce counter-theoretical reactions in stock prices. Given an empirical proxy for equilibrium returns, the present-value model implies a set of non-linear restrictions on the parameters of a VAR, the latter being taken as a model of investors' expectations formation. In my third analysis, I test various models of equilibrium returns using aggregate UK data, and find some support for market efficiency. In particular, in accordance with the intertemporal CAPM, I find that the well-known ability of the dividend yield to forecast stock returns can be traced to the fact that the dividend yield Granger-causes the market return variance. In the final section I test two propositions: whether rejections of the CAPM at the aggregate level can be traced to rejections in specific sub-sectors of the market; and whether investors are more skilled at eliminating mis-pricing within market sub-sectors than in the market as a whole. I find mixed support for the CAPM at the disaggregated level. Furthermore, eliminating the covariance terms from the model for sector returns has little effect on the results, providing some support for the market segmentation hypothesis.

The recent extending empirical evidence regarding the power of factor models versus the traditional CAPM has motivated the research in the current thesis. Substantial controversy has been raised over two issues: 1) Are the new factors, market value and book-to-market equity, the most important sources of risk? and 2) Is it time to consider CAPM as a useless model? Effectively, these are the main questions we attempt to address in the current research within a unified framework of firm attributes and more aspects of the econometrical applied approaches. The main findings of the empirical research in this thesis show that, firstly the beta portfolio returns exhibit the highest volatility, confirming thus the beta as the most significant risk source. Secondly, the market portfolio absorbs the excess returns of the majority of value-weighted factor portfolios which is partly attributed to the mitigation of the January effect. In the seasonality area, we identify a strong October effect with high volatility but not high returns, a phenomenon that cannot be explained with a rational story. The re-examination of the Fama and French 1992 model with corrections of econometrical problems and the application of panel data methodology reveals that the sole significant factor over all the candidate variables is the price variable. Yet, even the power of the price factor is eliminating with the application of non-linear systems where the CAPM constraints are directly validated but with a negative sign. However, the presence of negative risk premium is consistent with the valid application of CAPM in a financial world where the occurrence of bad states of world is more frequent than the presence of up markets. Overall, the results of this thesis contribute to a thorough understanding of the factor models' performance which plays a key role in the financial investment decisions. The implication is that the CAPM should be still regarded as the basic financial model in the risk-return management process.

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Since the economic turbulence in 1997, the issue on bank selection becomes important due to higher competition in the banking industry resulting from fewer survival of good corporate customers. Bankers in Thailand seem not to understand how to attract the corporate customers. This research hopes to enhance their understanding of what are the important factors ranking by corporate customers especially from manufacturing and service industries used in selecting bank loan. / An exploratory research by an in-depth interview method with open-ended questions was used. The total respondents are fifteen bankers and sixteen corporate customers with at least five years experience. They were picked equally from various types of banks, services and manufacturing industries. The interview process starts with the pre-test, first time interview to find out the important factors and sub-factors and second time to priority rank all these factors and sub-factors; a comparison of both is made and studied. / The model of bank selection is developed. Fourteen factors were found in this study which were classified by ranking into two groups: important factors (IF) and less important factors (LIF). The IF group with ranking from first to seventh place is attractive offering, good relationship, speed, service quality, lending policy, quality of relationship manager (RM) and branch facilities respectively. The LIF group with ranking from eighth to fourteenth place is bank image, personal relationship, banks' ownership, high technology, package, recommendations and bank merger respectively. The effect of different industries was less significant than the perception of bankers and corporate customers on factors used by corporate customers on selecting banks' loan. / The knowledge from this empirical study will help banks redesign effective and appropriate marketing strategy to attract target customers in manufacturing and service industries. The findings contribute knowledge to both researchers and practitioners of banking industry in Thailand. These, ultimately, hope to improve and turn to long-term relationship between bankers and clients. This will enhance the banks' long term competitiveness and sustainable growth. / Thesis (DBA(DoctorateofBusinessAdministration) )--University of South Australia, 2006.