Bridging the Gap: Structural Barriers to Financial Market Development for Urban Project Financing in Iran

Financing urban development projects through financial markets represents a cost-effective and accessible strategy. However, in many developing countries, municipalities face significant challenges due to the underdevelopment of financial markets and the limited availability of innovative and diversified financial instruments. These constraints are rooted in structural, legal, economic, and cultural barriers that hinder the efficient functioning of capital markets. This study aims to identify the key obstacles to financial market development and to examine the applicability of various financial instruments for urban project financing. A mixed-methods approach was employed, combining both qualitative and quantitative techniques. Initially, a conceptual model was developed, followed by semi-structured interviews with financial experts from Tehran Municipality to inform the construction of the research questionnaire. The findings highlight the critical role of economic, financial, structural, legal, religious, judicial, and cultural challenges in urban project financing. Based on the results, Sukuk instruments specifically Ijara and Istisna- are identified as the most appropriate tools for financing urban infrastructure projects in the context of developing economies.

کلیدواژه ها:

Financial markets development ، financing ، securities ، urban projects