An investigation of the mid-loan relationship between bank lenders and borrowers

Research in Finance

ISBN: 978-0-76231-277-1, eISBN: 978-1-84950-391-4

ISSN: 0196-3821

Publication date: 1 January 2005

Abstract

We investigate the nature of mid-loan relationships between bank-lenders and borrowers, to test whether firms borrow from banks to signal quality. Using the LPC DealScan, CRSP, and Wall Street Journal databases, we test whether borrower abnormal returns are related to bank, borrower, deal, and/or event characteristics during the duration of the loan. We demonstrate that borrower abnormal returns are related to mid-loan bank events, defined as an event resulting in bank abnormal returns beyond a specified threshold. The results suggest that borrowers are affected by bank events mid-loan, even when the event is not directly related to bank default.

Citation

Gottesman, A.A. and Roberts, G.S. (2005), "An investigation of the mid-loan relationship between bank lenders and borrowers", Chen, A.H. (Ed.) Research in Finance (Research in Finance, Vol. 22), Emerald Group Publishing Limited, Bingley, pp. 273-303. https://doi.org/10.1016/S0196-3821(05)22010-5

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

To read the full version of this content please select one of the options below

You may be able to access this content by logging in via Shibboleth, Open Athens or with your Emerald account.
If you think you should have access to this content, click the button to contact our support team.