The Dominant Bank Effect: How High Lender Reputation Affects the Information Content and Terms of Bank Loans

• 成果类型: Article
• 署名作者: Ross, David Gaddis
• 署名单位: Columbia University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhp117
• 发表日期: 2010
• 页码: 2730
• 关键词: Financial intermediation; STILL MATTER; OFFERINGS; AGREEMENTS; distance; debt

摘要

Three large banks control over half of the U.S. commercial loan market by volume through the syndication process. Using attributes of a borrower's location to instrument for lender borrower matching, I show that the borrower stock price response to a loan announcement is more favorable if one of these dominant banks is the lender, especially if the borrower is opaque. I then show that these banks charge lower interest rates and are more likely to lend without the protection of a borrowing base. The results suggest that the dominant banks have a particularly high reputation for screening and monitoring borrowers. (JEL G21, L14)