Rough waters in post-crisis ship finance and its influence on shipbuilding industry

Pao Yue-kong Library Electronic Theses Database

Rough waters in post-crisis ship finance and its influence on shipbuilding industry

 

Author: Zhou, Zhiqiang
Title: Rough waters in post-crisis ship finance and its influence on shipbuilding industry
Degree: M.Sc.
Year: 2010
Subject: Hong Kong Polytechnic University -- Dissertations
Shipping -- Finance
Shipbuilding industry
Department: Graduate School of Business
Pages: vi, 116 leaves : ill. ; 31 cm.
InnoPac Record: http://library.polyu.edu.hk/record=b2392255
URI: http://theses.lib.polyu.edu.hk/handle/200/5868
Abstract: This thesis concerns problems in current ship finance market. Ship finance is a constant driving force underlying the ebb and flow in shipping industry. Practitioners in ship finance market are playing at the crossroads of shipping market and financial market. The world financial tsunami has hit the ship finance market heavily. On the one hand, the crisis brought about a credit crunch and the liquidity of the capital market dried up, which threatened the provision of sufficient finance to shipping industry. On the other hand, financial crisis impacts the physical economy and the international trade. The demand for shipping service drops dramatically. The main motivation for the creation of this thesis is to clarify the chaotic situation in the current ship finance market and to probe its influence on the shipbuilding industry. The analysis of this study reveals structural changes in the ship finance market. Shipping bank loans shrank quickly. Traditional lenders now become more selective and conservative. On the other hand, the capital market comes to the rescue and becomes an important source of ship finance. However, a record large amount of new building orders impose huge demand for finance. Ship owners find increasing difficulties in securing enough money to finance the ships on order. The plague in ship finance after the financial crisis infects the shipbuilding industry severely. The survival of shipyards is under threat. This study contributes to the development of ship finance in the following aspects. Firstly, in this study a comprehensive picture of ship finance in post-crisis era is presented. Efforts have also been made to search the roots of the changes in post-crisis ship finance. Secondly, the review of the ship finance history and especially the previous ship finance super cycle casts light on the understanding of the whole process of the change and what the future direction would be. Thirdly, this study attempts to link the ship finance and shipbuilding industry together. The influence of the ship finance market on the shipbuilding market is identified. Last but not least, suggestions are raised in this study to solve the problems and break the deadlocks in current circumstances. Long-term perspectives are also provided in terms of the investment strategies of various stakeholders to avoid structural imbalance in ship finance.

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