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

Do Unsolicited Bank Credit Ratings Matter to Bank Leverage Decision? Evidence from Asian Countries

Advances in Pacific Basin Business, Economics and Finance

ISBN: 978-1-78973-286-3, eISBN: 978-1-78973-285-6

ISSN: 2514-4650

Publication date: 21 August 2019

Abstract

This chapter differentiates the effect of solicited credit ratings (SCRs) and unsolicited credit ratings (UCRs) on bank leverage decision before and after the credit rating change. We find that banks with UCRs issue less debt relative to equity when the credit rating changes are approaching. Such findings are also prominent when bank credit rating moves from investment grade to speculative grade. After credit rating upgrades (downgrades), banks with unsolicited (solicited) credit ratings are inclined to issue more (less) debt relative to equity than those with solicited (unsolicited) credit ratings. We conclude that SCR and UCR changes lead to significantly different effects on bank leverage decision.

Keywords

Acknowledgements

Acknowledgment

Dr Qin gratefully acknowledges the financial support from Beijing Natural Science Foundation of China (Grant No. 61603092)

Citation

Hsiao, Y.-J., Qin, L. and Lin, Y.-L. (2019), "Do Unsolicited Bank Credit Ratings Matter to Bank Leverage Decision? Evidence from Asian Countries", Advances in Pacific Basin Business, Economics and Finance (Advances in Pacific Basin Business, Economics and Finance, Vol. 7), Emerald Publishing Limited, Bingley, pp. 231-253. https://doi.org/10.1108/S2514-465020190000007011

Publisher

:

Emerald Publishing Limited

Copyright © 2019 Emerald Publishing Limited