Networking Behind the Scenes: Institutional Cross-Industry Holdings and Corporate Loan Markets

• 成果类型: Article
• 署名作者: He, Jie (Jack); Liang, Lantian; Wang, Hui (Grace); Xia, Han
• 署名单位: University System of Georgia; University of Georgia; University of Sydney; Bentley University; University of Texas System; University of Texas Dallas
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4911
• 发表日期: 2024
• 关键词: cost of loans; institutional cross-industry holdings; hold-up problem; dual presence; institution mergers

摘要

Institutional investors increasingly hold firms in both the industrial and financial sectors. These cross-industry holdings link firms to outside banks that they have not borrowed from, creating a network between the two sectors. We show that such networks reduce firms' loan spreads. This effect is more prominent when cross-holders are actively involved in borrowers' routine operations and when they have stronger incentives to advocate for borrowers in the loan process. Furthermore, outside banks begin to lend more to firms once the two parties become linked. This network is behind-the-scenes because it does not arise from prior interactions between firms and banks, but is instead built through institutions' cross-holdings.