Lender Trust and Bank Loan Contracts

• 成果类型: Article
• 署名作者: Hagendorff, Jens; Lim, Sonya; Nguyenc, Duc Duy
• 署名单位: University of London; King's College London; DePaul University; Durham University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4371
• 发表日期: 2023
• 页码: 1758-1779
• 关键词: CEOs; trust; Cultural values; FINANCIAL CONTRACTS

摘要

We examine the contractual implications of a lender's trust for corporate loans. We measure how trusting a lender is using the average trust attitude in the chief executive officer's ancestral country of origin. We find that banks with trusting CEOs charge lower interest rates in U.S. syndicated loans. This effect is identified within existing lender-borrower relationships and similar types of loans. Further analyses indicate that trust reduces the cost of credit by boosting the perceived credibility of borrower information and by mitigating contracting problems. We corroborate our findings by conducting a survey of loan officers with experience in loan syndication.