Bank Loans (bank + loan)

Distribution by Scientific Domains


Selected Abstracts


THE PROCYCLICAL LEVERAGE EFFECT OF COLLATERAL VALUE ON BANK LOANS,EVIDENCE FROM THE TRANSACTION DATA OF TAIWAN

ECONOMIC INQUIRY, Issue 2 2007
NAN-KUANG CHEN
We investigated the empirical relationship between firms' collateral values and land-secured loans over asset price cycles. A simultaneous equation model of loan demand and supply was estimated using a transaction-level data set from Taiwan. The data set contains collateral information and identifies lenders and borrowers. We found that the value of collateralizable assets has positive and significant effects on loan amounts and that the leverage effect of collateral is procyclical to asset price cycles. Firms in the electronics industry, the star industry in the sample period, are found to borrow more than other firms do at each marginal dollar of collateral. (JEL C50, E30, G20) [source]


BANKS' DIVERSIFICATION, CROSS-SELLING AND THE QUALITY OF BANKS' LOANS

THE MANCHESTER SCHOOL, Issue 2009
STEFANIA COSCI
In this paper we model and empirically test the impact of banks' shift towards financial services on their screening activity and on the quality of their loans. We present a model where it is easier to sell services to positively evaluated loan applicants and we show that the larger the banks' income from services, the lower their optimal screening effort. This prediction is consistent with the empirical evidence based on a panel of European banks and showing that the quality of banks' loans decreases with the share of commission income (a proxy for income from services). [source]


Bank Loans Versus Bond Finance: Implications for Sovereign Debtors,

THE ECONOMIC JOURNAL, Issue 510 2006
Misa Tanaka
This article analyses the optimal choice between bank loans and bond finance for a sovereign debtor. It shows that if borrowers can be ,publicly monitored' by a rating agency that disseminates the information about their creditworthiness, their choice between bank loans and bond finance is determined by the trade-off between two deadweight costs: the crisis cost of default and the cost of debtor moral hazard. If crisis costs are large, sovereigns use bank loans for short-term financing and bond issuance for long-term financing. I also demonstrate that state contingent debt and IMF intervention can improve welfare. [source]


Corporate Governance and Financial Distress: evidence from Taiwan

CORPORATE GOVERNANCE, Issue 3 2004
Tsun-Siou Lee
Prior empirical evidence supports the wealth expropriation hypothesis that weak corporate governance induced by certain types of ownership structures and board composition tends to result in minority interest expropriation. This in turn reduces corporate value. However, it is still unclear whether corporate financial distress is related to these corporate governance characteristics. To answer this question, we adopt three variables to proxy for corporate governance risk, namely, the percentage of directors occupied by the controlling shareholder, the percentage the controlling shareholders shareholding pledged for bank loans (pledge ratio), and the deviation in control away from the cash flow rights. Binary logistic regressions are then fitted to generate dichotomous prediction models. Taiwanese listed firms, characterised by a high degree of ownership concentration, similar to that in most countries, are used as our empirical samples. The evidence suggests that the three variables mentioned above are positively related to the risk for financial distress in the following year. Generally speaking, firms with weak corporate governance are vulnerable to economic downturns and the probability of falling into financial distress increases. [source]


CHANGING PATTERN OF CORPORATE GOVERNANCE AND FINANCING IN THE KOREAN CHAEBOLS

ECONOMIC PAPERS: A JOURNAL OF APPLIED ECONOMICS AND POLICY, Issue 3 2007
BYUNG S. MIN
The de jure financial system in Korea has moved from mainly R (relationship)-mode financial contracts towards M (market)-mode contracts since the 1997 financial crisis, due largely to reforms introducing Anglo-American style corporate governance and the disintermediation of the larger business groups in corporate financing. Analysis shows that the effectiveness of this change in improving firms' performances has yet to be demonstrated. Unlike the disintermediation of the big-name firms, the affiliates of small and medium business groups and small and medium-sized independent firms have relied heavily on bank loans and internal finance. The impact of a more concentrated banking system and intensified competition on the type of corporate investment has yet to be analysed. [source]


The Impact of Corporate Governance and Audit Quality on the Cost of Private Loans,

ACCOUNTING PERSPECTIVES, Issue 4 2009
Ling Chu
ABSTRACT The objective of this paper is to examine whether banks discriminate between firms on the basis of their financial condition when assessing the credit default risk, and to what extent corporate governance and auditor quality mitigate such risks in the pricing of new bank loans. The results indicate that, depending on the probability of bankruptcy, banks rely on different monitoring devices. For firms with a low probability of bankruptcy, banks do not rely on the quality of corporate governance or the auditor's industry specialization. However, auditor tenure and a change in auditor affect the spread. For firms with a high probability of bankruptcy, the spread is adjusted for the quality of corporate governance and the auditor's specialization. These results are robust to alternative specifications and measures. [source]


Domestic Crony Capitalism and International Fickle Capital: Is There a Connection?

INTERNATIONAL FINANCE, Issue 1 2001
Shang-Jin WeiArticle first published online: 16 DEC 200
Domestic crony capitalism and fickle international capital flows are often suggested as two rival explanations for currency crises. This article examines a possible linkage between the two that has not been explored much in the literature: domestic crony capitalism may make a country more dependent on the more fickle type of international capital flows (e.g. international bank loans) rather than the less volatile type (e.g. foreign direct investment). It presents statistical evidence that the degree of domestic crony capitalism is indeed associated with a higher external loan-to-FDI ratio. Such a composition of capital flows has been identified as being associated with a higher incidence of a currency crisis. Therefore, even though crony capitalism does not forecast the exact timing of a crisis, it can nevertheless increase its likelihood. [source]


Consumer attitudes towards debt in an islamic country: managing a conflict between religious tradition and modernity?

INTERNATIONAL JOURNAL OF CONSUMER STUDIES, Issue 3 2008
Alhassan G. Abdul-MuhminArticle first published online: 10 APR 200
Abstract Saudi Arabia is an important country in the Islamic world, and Islam prohibits the payment and receipt of interest, a key component of modern commercial bank loans. Yet the levels of commercial bank lending in the country for private non-commercial purposes has been rising sharply for the past decade. This study seeks an explanation for this increase by examining the nature of consumer attitudes towards debt in the country, and whether the increasing levels of consumer debt can be explained by existing positive debt attitudes. Using data from a convenience sample of consumers in the major cities of the country, the study finds general debt attitudes to be surprisingly positive, though tempered by the consumption purpose for which the debt is acquired. However, the positive attitudes are unrelated to actual debt acquisition. Rather, socio-demographic differences in attitudes are similar to those reported in the literature. Attitudes are generally more positive among young, highly educated Saudi males than other socio-demographic groups. This suggests a possible struggle to manage a conflict between the Islamic prohibition of interest-based borrowing and demands of the modern economy. [source]


Bank Relationships and the Value Relevance of the Income Statement: Evidence from Income-Statement Conservatism

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2007
Wooseok ChoiArticle first published online: 10 MAY 200
Abstract:, This study examines the effects of a firm's debt financing decision on the informativeness of the income statement. This study specifically examines the association between a firm's bank dependence and the value relevance of the income statement by investigating the income-statement conservatism of firms with bank loans. Focusing on relatively small businesses, this study finds that income-statement conservatism, measured as timely loss recognition, is increasing in a firm's bank dependence. This study also finds that the value relevance of the income statement is increasing in a firm's bank dependence. The findings of this paper suggest that the usefulness of the income statement varies with a firm's bank dependence, indicating that the value relevance of the income statement is a function of a firm's debt financing decision. The findings further suggest that bank relationships affect the value relevance of the income statement through their influence on income-statement conservatism. [source]


The Implications of Trade Credit for Bank Monitoring: Suggestive Evidence from Japan

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 2 2008
Yoshiro Miwa
Firms in modern developed economies borrow from both banks and trade partners. Using Japanese manufacturing data from the 1960s, we estimate the price of trade credit, and explore some of the ways firms choose between the credit and bank loans. We find that firms of all sizes borrow heavily from their trade partners, and at implicit rates that track the explicit rates banks would charge. They borrow from banks when they anticipate needing money for relatively long periods; they turn to trade partners when they face short-term unexpected exigencies. This apparent contrast in the term structures follows, we suggest, from the fundamentally different way bankers and trade partners cut default risk. Because bankers seldom know their borrowers' industries first hand, they rely on formal legal protection (like security interests). Because trade partners know the industry well, they reduce risk by monitoring their borrowers closely instead. Because the costs to creating legal mechanisms are heavily front-loaded, bankers focus on long-term debt; because the costs of monitoring debtors are ongoing, trade creditors do not. Apparently, banks monitor less than we have thought. [source]


Loan Officer Turnover and Credit Availability for Small Firms

JOURNAL OF SMALL BUSINESS MANAGEMENT, Issue 4 2006
Jonathan A. Scott
This paper presents empirical evidence on the role loan officers play in facilitating small firm access to commercial bank loans. If loan officers use soft information (for example, assessments of character, information from customers and suppliers) to make lending decisions that would not otherwise be made on the basis of hard information (for example, tax returns or financial statements), then, frequent turnover in loan officers should be associated with an adverse effect on credit availability. This relationship is confirmed empirically using survey data of U.S. small firms in 1995 and 2001, where loan officer turnover is positively related to the turndown rate on the most recent loan application. Although loan officer turnover could be influenced by the turndown rate (for example, an owner changes banks and gets a new loan officer as a result of a recent turndown), its negative effect on credit availability persists under several different tests. [source]


Local Banks Efficiency and Employment

LABOUR, Issue 3 2008
Patrizia Ordine
We argue that if banks are not efficient in monitoring the borrowers in the presence of asymmetric information, credit market imperfections have real effects. We estimate dynamic equations using system generalized method of moments (GMM) for bank loans and employment on panel data for Italian firms. The system GMM estimates indicate that the impact of credit market on employment is higher where the local financial market is less developed, asymmetric information is widespread, bank managers are less efficient in assessing the firms' solvency and do not use appropriate methods to evaluate the borrowers' payback capacity. [source]


Bank Loans Versus Bond Finance: Implications for Sovereign Debtors,

THE ECONOMIC JOURNAL, Issue 510 2006
Misa Tanaka
This article analyses the optimal choice between bank loans and bond finance for a sovereign debtor. It shows that if borrowers can be ,publicly monitored' by a rating agency that disseminates the information about their creditworthiness, their choice between bank loans and bond finance is determined by the trade-off between two deadweight costs: the crisis cost of default and the cost of debtor moral hazard. If crisis costs are large, sovereigns use bank loans for short-term financing and bond issuance for long-term financing. I also demonstrate that state contingent debt and IMF intervention can improve welfare. [source]


Is the Lending Channel of Monetary Policy Dominant in Australia?

THE ECONOMIC RECORD, Issue 249 2004
Tomoya Suzuki
The transmission process of monetary policy is a longstanding macroeconomic issue. The lending view is that a monetary tightening affects aggregate demand by shifting the supply schedule of bank loans left. The contraction of bank loans does not necessarily mean a shift of the supply schedule. Therefore, testing the lending view requires the identification of the shifts of the demand and supply schedules in the bank loan market. This paper employs an original approach, finding that the lending channel is not dominant in Australia. The paper also examines features of Australian banks' behaviour which make the lending channel less dominant. [source]


Debt financing, soft budget constraints, and government ownership Evidence from China1

THE ECONOMICS OF TRANSITION, Issue 3 2007
Lihui Tian
G32; G34; P34 Abstract Debt financing is expected to improve the quality of corporate governance, but we find, using a large sample of public listed companies (PLCs) from China, that an increase in bank loans increases the size of managerial perks and free cash flows and decreases corporate efficiency. We find that bank lending facilitates managerial exploitation of corporate wealth in government-controlled firms, but constrains managerial agency costs in firms controlled by private owners. We argue that the failure of corporate governance may derive from the shared government ownership of lenders and borrowers, which nurtures soft budget constraints. [source]


USE OF THE MONEY SUPPLY IN THE CONDUCT OF JAPAN'S MONETARY POLICY: RE-EXAMINING THE TIME-SERIES EVIDENCE,

THE JAPANESE ECONOMIC REVIEW, Issue 2 2005
RYUZO MIYAO
This paper re-examines whether the money supply (M2 + CDs) can predict future economic activity in Japan, using recent data to the end of 2003. I find that the linkage between M2 and income or prices has largely disappeared since the late 1990s. Evidence suggests that (i) time deposit behaviour is primarily responsible for the breakdown in the M2,income relationship; (ii) bank loans also lost their predictive content in the late 1990s; and (iii) there has been a close link between time deposits and bank loans. Non-performing loans problems and ongoing restructuring may be root causes of these findings. [source]