Financial distress and bank lending relationships

• 成果类型: Article
• 署名作者: Dahiya, S; Saunders, A; Srinivasan, A
• 署名单位: Georgetown University; New York University; University System of Georgia; University of Georgia
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/1540-6261.00528
• 发表日期: 2003
• 页码: 375-399
• 关键词: HIGHLY LEVERAGED TRANSACTIONS; Debt crisis; reorganization; performance; EFFICIENCY; prices; credit

摘要

We use a unique data set of bank loans to examine the wealth effects on lead lending banks when their borrowers suffer financial distress. We find a significant negative announcement return for the lead lending bank when a major corporate borrower announces default or bankruptcy. Banks with higher exposure to the distressed firm have larger negative announcement-period returns. The existence of a past lending relationship with the distressed firm results in larger wealth declines for the bank shareholders. Finally, financial distress also has a significant negative effect on borrower's returns.