Legal Risk – Return Assessment of Public Financing Instruments

An Integrated Decision-Making Approach

Abstract

Public financing instruments play a vital role in supporting fiscal stability, yet the main problem lies in the lack of comprehensive evaluation frameworks that integrate legal risk with financial performance. Existing practices often focus on cost-based indicators, while critical factors such as legal certainty, contingent liabilities, and institutional capacity are not systematically analysed. The literature also shows a significant gap in identifying and prioritising these multidimensional criteria within a unified decision-making structure. This study aims to develop a robust model that evaluates public financing strategies by incorporating both financial and legal dimensions. To address this gap, a novel decision-making model is proposed by integrating CRITIC and RAWEC techniques with Fermatean fuzzy sets to better capture uncertainty in expert judgments. The findings indicate that corporate and administrative applicability and contingent liability risk are the most critical criteria, while public–private partnership-supported instruments are the most suitable strategies. The proposed model contributes to the literature by offering a more flexible and realistic analytical framework. It is recommended that policymakers prioritise risk sharing mechanisms and strengthen institutional capacity for more sustainable financing decisions.