SoleCRISTransition linkFrontpageTransition linkInstructionsTransition linkLogin Bank of Finland

A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
      
This is the view page of publication. On this page you can view basic information of publication or go back on previous page using back-action on the bottom of the page. If you want to move to edit the information of publication, use the actions on the bottom of the page or continue using the system from menu.


Bank Market Power and Loan Contracts: Empirical Evidence, Economic Notes 3 ; November (2017). Hasan, Iftekhar; Liu, Liuling; Wang, Haizhi; Zhen, Xinting


Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Hasan, Iftekhar; Liu, Liuling; Wang, Haizhi; Zhen, Xinting 
Number of authors
Status Published
Year of publication 2017 
Date 12.06.2017 
Name of article Bank Market Power and Loan Contracts: Empirical Evidence 
Name of journal Economic Notes
Volume of issue 46 
Number of issue 3 ; November 
Pages 649-676 
Abstract Using a sample of syndicated loan facilities granted to US corporate borrowers from 1987 to 2013, we directly gauge the lead banks’ market power, and test its effects on both price and non-price terms in loan contracts. We find that bank market power is positively correlated with loan spreads, and the positive relation holds for both non-relationship loans and relationship loans. In particular, we report that, for relationship loans, lending banks charge lower loan price for borrowing firms with lower switching cost. We further employ a framework accommodating the joint determination of loan contractual terms, and document that the lead banks’ market power is positively correlated with collateral and negatively correlated with loan maturity. In addition, we report a significant and negative relationship between banking power and the number of covenants in loan contracts, and the negative relationship is stronger for relationship loans.
Free text descriptor in Finnish yritykset; luotot; pankit; rahoitus; luotonanto; 
ISSN / e-ISSN 0391-5026 
auki Internet addresses
Additional information First published: 12 June 2017