Details

Autor(en) / Beteiligte

• Jin, Hongmin
• Wang, Lu
• Xiao, Zuoping
• Fung, Hung‐Gay

Titel

What firm risk factors drive bank loan pricing and other terms? Evidence from China

Ist Teil von

• Accounting and finance (Parkville), 2023-09, Vol.63 (3), p.2985-3010

Ort / Verlag

Clayton: Blackwell Publishing Ltd

Erscheinungsjahr

2023

Quelle

Business Source Ultimate【Trial: -2024/12/31】【Remote access available】

Beschreibungen/Notizen

• Abstract This study investigates how firm risk factors affect bank loan pricing. Although firm‐specific stock price crash risk affects bank loan costs directly, it also prompts other risks, including financial restatement and litigation, which in turn trigger higher bank loan costs. Strong internal and external governance mechanisms help reduce agency problems and improve information transparency, alleviating the adverse effect of stock price crash risk on loan costs. Our results confirm that bankers take good corporate governance into account in their bank loan decisions. We also show that bond investors price the adverse effect of stock price crash risk, prompting higher corporate bond costs. Futher evidence suggests that banks impose stricter non‐price terms, such as smaller loan size, shorter loan maturity, and a higher likelihood of collateral requirement, on firms with higher crash risk.