Project Financing Equilibrium Analysis Based On Evolutionary Game Theory

Traditional way of project financing in China revealed some problems, such as limitedaccess, lack of financing and other issues under asymmetric information. Due to the longconstruction period, the high-cost of construction, project requires the parties mutual trust andcooperation in order to meet the goal, which will expand the complexity of the projectimplementation process, accordingly which will affect the investor’s investment decision.Concerning to guard against risks, such as the fluctuations in financial market and policy risk,investors tend to intensify regulation and compress the money supply lines in order toimprove the efficiency of the use of funds. But mostly bank loan is the main channels ofraising money. The incompetence of financiers self-raised funds, excessive depending onfinancial institutions, and over-using debt to raise funds, have reduced the sources ofreproduction money. Owing to the disadvantages brought by the investment financing way,traditional way of project financing in China cannot maximize the advantages of investors andfinanciers. Besides, the two sides will not get the best returns by this way. Based on theanalysis of evolutionary game theory information asymmetry and the research status ofproject financing, the paper systematically formulates the related subjects and financingpattern of Engineering project finance.Introducing the classical game theory,evolutionary game theory, information asymmetrytheory and other related theories, using classical game theory, this paper makes a further stepin using evolutionary game theory to develop the evolutionary stable strategy on projectfinancing. By the comparison of the conclusions made by two theories, the paper eventuallyfinds that using evolutionary game theory seems more reasonable than using the classic gametheory on the analysis of project financing. Because of the lack of theoretical knowledge andpractical experience, this paper aims to broaden the application field of evolutionary gametheory and supplementary project financing methods, to provide the reference of projectfinancing to future research. However, the conditions of the finance division, game settingsand so on still need to be argumented.