Bridging the gap: the design of bank loan contracts and distance

• 成果类型: Article
• 署名作者: Hollander, Stephan; Verriest, Arnt
• 署名单位: Tilburg University; Universite Catholique de Lille; EDHEC Business School
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2015.09.006
• 发表日期: 2016
• 页码: 399-419
• 关键词: Private debt; Debt covenants; Geographical distance; information asymmetry

摘要

How do the distance constraints faced by lenders in acquiring borrower information affect the design of bank loan contracts? Theoretical studies posit that greater information asymmetry leads to the allocation of stronger ex ante decision rights to the lender (the uninformed party). Consistent with this hypothesis, we find that, upon inception, contracts tend to be more restrictive when firms seek loans from remote lenders. This finding is robust to potential endogeneity bias and simultaneity of various loan terms. Overall, we establish a strong informational link between distance and loan contract design. (C) 2015 Elsevier B.V. All rights reserved.