Abstract:

As the primary fund provider of PPP projects， financial institutions need to bear substantial economic losses when risks occur in the project. But they rarely participate in the project's risk management process， which is not conducive to reducing the possibility of risk events and promoting the smooth implementation of PPP projects. As many stakeholders as possible should be involved in the risk management process of a project. As essential stakeholders of PPP projects， financial institutions participating in the project's risk management process can not only meet their own needs to reduce risk losses but also increase the experience of project risk management and improve the ability of project risk management. Therefore， the risk management incentive effects of financial institutions' early intervention in PPP projects is studied. Based on the principal-agent theory， the dual principal-agent model in which financial institutions intervene in the planning stage of PPP projects early and the single principal-agent model in which financial institutions do not intervene early are constructed. The results show that the dual principal-agent model under the scenario of financial institutions' early intervention can enhance the government's incentive intensity and improve private investors' risk management and non-risk management efforts. In addition， the expected level of utility gained by the government and the expected level of utility gained by financial institutions has been increased. The findings are conducive to mobilizing financial institutions' enthusiasm to participate in PPP projects， rationally plan projects， actively participate in project risk management， and promote the successful implementation of projects.

Key words: PPP project, financial institutions, principal-agent, incentive mechanism