Bank Balance Sheets and the Value of Lending.

By:

Chen, Jiaqian

Contributor(s):

Vera, Giuseppe

Material type: Text

TextSeries: IMF Working PapersPublication details: Washington, D.C. : International Monetary Fund, 2017.Description: 1 online resource (29 pages)Content type:

text

Media type:

computer

Carrier type:

online resource

ISBN:

9781475599183
1475599188

ISSN:

1018-5941

Subject(s):

Genre/Form:

Electronic books.

Additional physical formats: Print version:: Bank Balance Sheets and the Value of Lending.DDC classification:

332.7 23

LOC classification:

HG1641

Online resources:

EBSCOhost

Contents:

Cover; Contents; I: Introduction; II: Literature Review; III: Loan Announcements and Bank Balance Sheets; IV: Borrower Performance; V: Discussion and Conclusions; Appendix; A Data Description; B Model; List of Tables; 1 The Effect of Loan Announcements on Borrower Equity Returns; 2 The Effect of Lender Characteristics on Borrower Equity Returns (1); 3 The Effect of Lender Characteristics on Borrower Equity Returns (2); 4 The Effect of Lender Characteristics on Borrower Equity Returns (3); 5 The Loan Announcement Effect and Borrower Performance; A1 Summary Statistics for Syndicated Loan Deals.

List of FiguresB1 Bank Lending, Profit, and Monitoring Intensity -- Baseline; B2 Bank Lending, Profit, and Monitoring Intensity -- Sensitivity Analysis.

Abstract: We study 1,400 UK syndicated loans, together with the financial history of the lead bank and the borrowing firm. We interpret abnormal equity returns around loan announcements as the value of the lending relationship to the firm. We find that: (i) Consistent with previous evidence, the value of lending is higher when the firm is riskier or more opaque, suggesting that it primarily reflects the lead bank's screening and monitoring activities. (ii) As a bank becomes larger, more profitable or more capitalized, the value of its loans first increases and then decreases. The largest, most capitalised or most profitable banks do not give the most valuable loans. (iii) Firms which receive low-value loans are more likely to experience low profitability and financial distress during the lending relationship. By relating the state of bank balance sheets to borrower performance, we offer a new angle to evaluate the impact of financial conditions on the real economy.

Holdings ( 1 )
Title notes ( 5 )

Holdings
Item type	Current library	Collection	Call number	Status	Date due	Barcode	Item holds
eBook	e-Library	EBSCO Business		Available

Total holds: 0

Print version record.

List of FiguresB1 Bank Lending, Profit, and Monitoring Intensity -- Baseline; B2 Bank Lending, Profit, and Monitoring Intensity -- Sensitivity Analysis.

We study 1,400 UK syndicated loans, together with the financial history of the lead bank and the borrowing firm. We interpret abnormal equity returns around loan announcements as the value of the lending relationship to the firm. We find that: (i) Consistent with previous evidence, the value of lending is higher when the firm is riskier or more opaque, suggesting that it primarily reflects the lead bank's screening and monitoring activities. (ii) As a bank becomes larger, more profitable or more capitalized, the value of its loans first increases and then decreases. The largest, most capitalised or most profitable banks do not give the most valuable loans. (iii) Firms which receive low-value loans are more likely to experience low profitability and financial distress during the lending relationship. By relating the state of bank balance sheets to borrower performance, we offer a new angle to evaluate the impact of financial conditions on the real economy.

Added to collection customer.56279.3 - Master record variable field(s) change: 072