Document Type


Publication Date



Successfully achieving a low-carbon transition in the transport sector requires an understanding of the lending logics of the financial institutions in order to identify the financing directionality and gaps. However, in the transportation literature, there is a lack of attention on the relationship between financing sources and the direction of innovation. The present study seeks to address this by mapping the flow of finance from financial institutions to transport projects. Our dataset consists of 9 transport projects included in the Philippines’ Nationally Determined Contribution (NDC). We consider different types of projects (rail development, bus rapid transit implementation, jeepney modernization) and various financial actors (multi-lateral banks, private and government banks). Through an analysis of loan portfolio composition and interview data, we uncover the underlying logics of each financial institution in lending to transport projects. Our findings suggest that the lending logics of many financial institutions is primarily driven by portfolio and borrower credit-worthiness considerations, and less by motivations concerning sustainability transition. As a result, with respect to the average, some transport projects are over-financed (e.g. rail development), while others – which have a high potential to accelerate decarbonization – are under-financed (e.g. jeepney modernization). All these have profound implications for the directionality of low-carbon transition. Deeper engagement of transition research with finance is a nascent field, and the current research contributes to the literature not only by presenting a comprehensive mapping of several financing sources and projects, but also of proposing three credit enhancement mechanisms to mobilize capital for under-financed projects.