Financial Distress and Bank Lending Relationships  

Oleh:

Dahiya, Sandeep ; Saunders, Anthony ; Srinivasan, Ananth

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 58 no. 1 (Feb. 2003), page 375-399.
Topik: Financial; credit; bank
Fulltext: p 375.pdf (201.45KB)

Isi artikel

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 firmha ve 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.

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