Browsing by Subject "syndicated loans"

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  • Deli, Yota; Delis, Manthos D.; Hasan, Iftekhar; Liu, Liuling (2016)
    Bank of Finland Research Discussion Papers 23/2016
    Formal enforcement actions issued against banks for violations of laws and regulations related to safety and soundness can theoretically have both positive and negative effects on the terms of lending. Using hand-collected data on such enforcement actions issued against U.S. banks, we show that they have a strong negative effect on price terms (loan spreads and fees) for corporate loans and a positive one on non-price terms (loan maturity, size, covenants, and collateral). The results also indicate that in the absence of enforcement actions, the cost of borrowing during the subprime crisis would have been much higher, while punished banks intensify use of collateral.
  • Fungáčová, Zuzana; Godlewski, Christophe J.; Weill, Laurent (2020)
    Quarterly Review of Economics and Finance February
    We study the effect of syndicated loan and bond announcements on the stock price of borrowers. No work since James (1987) on US data has compared the impact of both types of announcements on the same sample. Applying an event study methodology on a sample of companies from 17 Western European countries, we find that debt announcements tend to generate a positive stock market reaction. Our main conclusion is that loan issuance exerts a significantly stronger reaction than a bond issuance. This finding supports the hypothesis that loan issuance has a positive certification effect. The analysis of determinants of abnormal returns following debt announcements shows a positive impact for financial development and a negative effect for the Eurozone crisis.
  • Fungáčová, Zuzana; Godlewski, Christophe J.; Weill, Laurent (2015)
    Bank of Finland Research Discussion Papers 19/2015
    Published online in Quarterly Review of Economics and Finance, April 2019
    We study the effect of bank loan and bond announcements on borrower’s stock price. We apply an event study methodology on a sample of companies from 17 European countries and find that debt announcement generates a positive stock market reaction. However, our main conclusion is that the issuance of a loan exerts a significantly stronger reaction than does the issuance of a bond. This finding supports the hypothesis that loan issuance has a positive certification effect. The analysis of determinants of abnormal returns following debt announcements shows a positive impact of financial development and a negative effect of the Eurozone crisis.
  • Ambrocio, Gene; Hasan, Iftekhar (2018)
    Bank of Finland Research Discussion Papers 17/2018
    Published in Journal of Banking and Finance (Vol 106, September, 2019) as What drives discretion in bank lending? Some evidence and a link to private information
    We assess the extent to which discretion, unexplained variations in the terms of a loan contract, has varied across time and lending institutions and show that part of this discretion is due to private information that lenders have on their borrowers. We find that discretion is lower for secured loans and loans granted by a larger group of lenders, and is larger when the lenders are larger and more profitable. Over time, discretion is also lower around recessions although the private information content is higher. The results suggest that bank discretionary and private information acquisition behaviour may be important features of the credit cycle.