A study of ship financing practices in Hong Kong

Pao Yue-kong Library Electronic Theses Database

A study of ship financing practices in Hong Kong

 

Author: Zeng, Yiyi
Title: A study of ship financing practices in Hong Kong
Degree: M.Sc.
Year: 2009
Subject: Hong Kong Polytechnic University -- Dissertations
Merchant marine -- Economic aspects -- China -- Hong Kong
Shipping -- Finance
Department: Graduate School of Business
Pages: vii, 93 leaves : ill. ; 31 cm.
InnoPac Record: http://library.polyu.edu.hk/record=b2355984
URI: http://theses.lib.polyu.edu.hk/handle/200/5764
Abstract: Ship financing plays a significant role in shipping industry. However, due to the introvert nature of shipping business, systematic research of ship financing is rather limited. In this project, basing on a careful literature review, surveys targeting both shipowners and banks in Hong Kong are conducted to collect empirical evidence and describe the ship financing practices in Hong Kong. The questionnaire colleted from shipowenrs indicates their preferences and perceptions of different financing methods, which are related with characteristics of both the shipping industry and specific companies. Bank loan is the main source of financing by shipping companies in Hong Kong, with the advantages of lower cost, easier access, relatively flexible terms and conditions as well as non-disclosure of sensitive information. Another questionnaire collects banks' perceptions of risks in shipping, criteria for loan approval. The results suggest that the loan portfolio allocated to shipping and participation in syndicated loans have shrunk after the financial turmoil. As for the major factors of considerations in credit assessment, banks used to focus on quality, followed by marketing and security. After the financial turmoil, the concern for quality has increased even more, but security has been attached greater importance, taking the place of marketing, indicating a lower appetite for risk and higher requirements on collateral and guarantees. The study provides valuable insights into, and rationales for, the observed financing behaviors. It may be of particular interest to shipping companies who want to have a better idea of banks' ship financing policies and practices. It may also be of interest to banks who want to understand the major concerns and practices of other lenders.

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