Effect of climate-related risk on the costs of bank loans: Evidence from syndicated loan markets in emerging economies

Based on a novel dataset that combined syndicated loans originated in the emerging market economies with greenhouse gas emission intensity data of borrowers, this study examines whether and to what extent banks in these emerging markets have factored in climate transition risk in their lending decisions. On loan pricing, our results suggest that banks in these emerging markets have started to price-in climate transition risk for loans to emissions-intensive sector since the Paris Agreement. This could reflect their increased awareness of a climate-transition risk towards such firms. The extent of the transition risk premium is also found to be dependent on the environmental attitude of banks. Specifically, green banks are found to charge a higher loan spread than other banks, when lending to the same brown firm after the Paris Agreement. Apart from pricing a transition risk premium in the loan spread, we find evidence that banks may also consider imposing more stringent non-pricing contractual terms, such as shortening loan tenor and imposing collateral requirement, on brown firms especially when the associated credit risk impacts on these firms are more uncertain.     

浅析我国商业银行的贷款营销

目前,国内商业银行贷款营销的现状是贷款有效需求疲软,贷款营销认识普遍不全面,贷款投放谨慎。要辩证地看待买方市场下商业银行贷款营销的特点及其面临的难点,对市场进行细分,选择确定目标市场,做好商业银行贷款营销的定位。在强化贷款营销方面,要转变观念,强化贷款营销意识,树立现代银行营销理念;积极开发新的贷款品种,不断创造新的利润增长点;加强经济形势分析研究,认真开展市场调查;提高贷款营销队伍素质,强化贷款营销技术支持。     

Financial integration and banking crisis. A critical analysis of restrictions on capital flows

We investigate the effect of financial integration on a banking crisis. In contrast to existing works, we allow for capital restrictions while studying the impact of financial integration on a banking crisis. Using firm-level lending and borrowing information in the global market of syndicated loans; we generate aggregate measures of financial integration and examine how countries with capital flow restrictions thrive in the wake of a banking crisis. We concentrate on basic network measures of integration for a panel of 62 countries that allow for capital restriction at any time within the sample period. Financial integration increases the incidence of a banking crisis, and capital restrictions worsen a banking crisis. However, capital restrictions reduce the negative impact of financial integration on the incidence of a banking crisis. Thus, financial integration becomes beneficial when countries allow for some forms of capital control.     

The evolution of syndicated loan markets

This paper provides a historical perspective on the development of the global syndicated loan market, where $2.6 trillion worth of funds were raised in 2004. The emergence of the Eurodollar market in the 1960s, the balance of payments problems of non-oil-exporting emerging countries in the 1970s, the Latin American financial crises and the US merger wave of the 1980s, and finally the competitive financial environment and the emergence of the secondary loan market during the 1990s are reviewed. These have been the most influential financial developments that shaped the syndicated loan markets in the last few decades.     

A Credit Score System for Socially Responsible Lending

Ethical banking, microfinance institutions or certain credit cooperatives, among others, grant socially responsible loans. This paper presents a credit score system for them. The model evaluates social and financial aspects of the borrower. The financial aspects are evaluated under the conventional banking framework, by analysing accounting statements and financial projections. The social aspects try to quantify the loan impact on the achievement of Millennium Development Goals such as employment, education, environment, health or community impact. The social credit score model should incorporate the lender’s know-how and should also be coherent with its mission. This is done using Multi-Criteria Decision Making (MCDM). The paper illustrates a real case: a loan application by a social entrepreneur presented to a socially responsible lender. The decision support system not only produces a score, but also reveals strengths and weaknesses of the application.     

Banking relationship and default priority in consumer credit: Evidence from Thai microdata

Banks play an important role in consumer credit, and when borrowers face a decision on whether to default on mortgage or non-mortgage loans first, banking relationship may matter. Our study provides first evidence into the interplay between banking relationship and consumer default priority via credit bureau data of 1 million individuals in Thailand. We find that same-bank borrowers are less likely to default on mortgage loans first, and borrowers with longer banking relationship and lower switching cost are more likely to default on mortgage loans first (which is welfare-improving). Our results suggest that banking relationship can lead to better outcomes for defaulting borrowers even when switching cost is high.     

Bundling governance mechanisms to efficiently organize small firm loans

Bank loans are a common source of financing for small firms. While scholars have examined specific conditions that affect small firm loan approval and interest rates, practical questions remain about how these loans are structured to address characteristically acute challenges from asymmetric information. This paper suggests collateral, reputation, and relationship banking each perform unique exchange-organizing tasks, and that small firms systematically use them in predictable combinations. A multiple discriminant analysis of 796 small firm loans suggests four governance bundles are commonly employed in this setting. The implications for managers focus on how loan governance mechanisms are most efficiently bundled together.     

The Role of Federal and Private Student Loans in Homeownership Decisions

This paper examines the effect of student loans on the decision to become a homeowner. Analyses use the Baccalaureate and Beyond 2008:2012 (B&B) panel dataset collected by the U.S. Department of Education that surveyed a representative sample of four-year college graduates from institutions across the country. Whereas previous analyses of student loan debt rely on cumulative loan balances, the present research examines both federal and private student loan impacts separately. Private student loan data is often unavailable in major datasets, but the B&B data provide rich information on sources and amounts of debt for recent graduates. We instrument student loans using in-state tuition rates and find that for four-year college graduates, a $1,000 increase in a respondent's private student loan balance lowers the likelihood of buying a home by about 5 percentage points whereas a $1,000 increase in federal loans has no significant impact on homeownership during this time.     

Banking Reforms for the 21st Century: A Perfectly Stable Banking System Based on Financial Innovations*

Although bank loans themselves are somewhat illiquid because of private information, most of their cashflows are not. Recent financial innovations allow commercial loans to be liquefied via credit derivatives and actual and synthetic securitizations. The loan originating bank holds the remaining illiquid equity tranche containing the concentrated credit risk, private information rent and the ‘excess spread’ that incentivize the bank to continue to monitor and service the loans. Empirically, we find that the average size of the equity tranche is about 3% for the representative commercial loan portfolios in our sample. The liquefaction of bank loans makes possible a banking system that restricts the guaranteed accounts to be backed by 100% reserves and the non‐guaranteed deposits to be backed by liquid securitized loan tranches, while retaining the deposit‐lending synergy. Such a system is perfectly safe without deposit insurance and it renders banks bankruptcy‐remote without sacrificing a bank's traditional role as a financial intermediary.     

The impact of trade and financial openness on bank loan pricing: Evidence from emerging economies

In this paper, we examine the impact of trade and financial openness on bank loan pricing. Using data from 35 emerging economies, we first document that higher trade and financial openness lower interest rates on gross bank loans using country-specific measures for trade and financial openness. We then confirm our findings using firm-specific measures for trade and financial openness and individual loan spread. Exploiting the accession to World Trade Organization (WTO) as a quasi-natural experiment, we observe loan interest rates declined in countries after joining the WTO. Overall, we imply that openness is beneficial for financial development in emerging economies.     

Lending technologies,lending specialization,and minority access to small-business loans

We investigate minority access to small-business loans using a probit model of loan application denial that recognizes two loan types (line-of-credit loans and non-line-of-credit loans) made by two lender types (commercial banks and nonbank financial institutions). We estimate our model on data from the 1998 Survey of Small Business Finances. We find evidence consistent with minority equal access to bank credit lines and nonbank non-line-of-credit loans in highly competitive loan markets; in less competitive markets we find evidence consistent with unequal access to these loans. We also find evidence consistent with unequal minority access to bank non-line-of-credit loans, regardless of loan market competitiveness. Our findings differ from previous research which treats small-business loans as a homogenous product and finds evidence consistent with unequal minority access to small-business loans generally. We argue that the existence of multiple small-business lending technologies and loan specialization by lenders account for our findings and demonstrate the need to treat small-business loans as a heterogeneous product when investigating equal access to small-business credit.     

Perceived credit constraints in the European Union

The promotion and support of small and medium-sized enterprises (SMEs) is an essential component of policies designed to help improve Europe’s economic performance. A crucial issue is whether SMEs face difficulty obtaining bank loans. Using pre-crisis survey data from 2005 and 2006 for nearly 3,500 SMEs (firms with fewer than 250 employees) in the European Union (EU), we investigate the determinants of perceived bank loan accessibility at the firm level and at the country level. Based on hierarchical (multi-level) binomial logit regressions, our findings show that the youngest and smallest SMEs have the worst perception of access to bank loans. The SMEs in nations with concentrated banking sectors are more positive about loan accessibility. In addition, a high fraction of foreign-owned banks is associated with improved perception of loan accessibility in the EU 15 but not in the EU 10.     

国际银团贷款争议与国际商事仲裁的勃兴

国际银团贷款争议的解决长期倾向于跨国诉讼,近年来却倾向于国际商事仲裁,其原因有多种,值得注意。国际银团贷款争议诉诸国际商事仲裁的前提是仲裁协议的有效性,国际银团贷款争议的国际商事仲裁的程序适用普通的国际商事仲裁程序,但要注意一些电子文本的法律效力。国际银团贷款争议如在我国选择中国国际经济贸易仲裁委员会按其《金融争议仲裁规则》仲裁要认识到其特殊性。国际银团贷款争议的解决方式并不一概排斥诉讼,而且仰赖于司法监督。     

The Continuing Continuum Problem of Deposits and Loans

Barnett and Block (J Bus Ethics 18(2):179–194, 2011) argue that one cannot distinguish between deposits and loans due to the continuum problem of maturities and because future goods do not exist—both essential characteristics that distinguish deposit from loan contracts. In a similar way but leading to opposite conclusions (Cachanosky, forthcoming) maintains that both maturity mismatching and fractional reserve banking are ethically justified as these contracts are equivalent. We argue herein that the economic and legal differences between genuine deposit and loan contracts are clear. This implies different legal obligations for these contracts, a necessary step in assessing the ethics of both fractional reserve banking and maturity mismatching. While the former is economically, legally, and perhaps most importantly ethically problematic, there are no such troubles with the latter.     

INTEREST CHARGES FOR AUTOMOBILE LOANS IN METROPOLITAN TORONTO

This study addresses itself to the structure of interest rates for automobile loans in Toronto. Variations in interest charges were found among every type of lender. Because of the banking structure in Canada, loan rates would be similar in other parts of Ontario and in the other Canadian provinces.     

Relationship banking and escalating commitments to bad loans

The relationship banking literature suggests that business relationships play an important role in the loan decisions of small banks. We test one aspect of this hypothesis using a cross-sectional panel dataset of small banks located in Texas from 1994 to 2002. Our results suggest that small banks located in smaller counties escalate their commitment to bad loans when compared with those located in larger counties, even after controlling for psychological and social factors that influence escalation tendencies. These results highlight the need for small banks to trade-off the positive benefits of adopting a relationship banking strategy against its unintended negative consequence. We provide some suggestions on how small banks may lessen their escalation tendencies despite adopting a relationship banking strategy. The results of this study also suggest that small and medium-sized enterprises (SMEs) that develop strong relational bonds with small banks may benefit from continued access to credit facilities, especially during periods when they experience financial distress.     

A new approach to financial integration and market income inequality

Using loan contracts of firms in the syndicated loan market, we generate weighted aggregate measures of financial connections of emerging market economies and relate these financial integration indices to income inequality. The results reveal that financial integration is beneficial in reducing market income inequality, but worsens net income inequality. Financial intermediation is detrimental to net income inequality, but beneficial in lowering market income inequality. The results show that independent access to financing has no relationship with income inequality. The results are invariant using alternative income inequality indices and using external instrument against internal instrument in identifying the equations.     

Venture Capitalists, Syndication and Governance in Initial Public Offerings

This paper examines the development of effective boards in venture capital (VC)-backed initial public offerings. It argues that VC-backed IPOs suffer from two sets of agency costs which are related to principal–agent and principal–principal relationships between the founders and members of the VC syndicate. Using a unique sample of 293 entrepreneurial IPOs in the UK it shows that VC syndicates invest in relatively more risky firms. VC-backed IPOs have more independent boards than IPOs with no VC involvement, with board independence being higher in syndicated VC-backed firms. These results are consistent with assumption that these governance factors are used to mitigate agency costs associated with VC involvement in IPO firms. We also find that in syndicated IPOs there is a higher equity presence of passive private equity firms investing alongside VC firms.     

Cross-sectional determinants of bank performance under deposit dollarization in emerging markets

Dollar-denominated deposits and loans could increase financial fragility in emerging market banking systems. This currency mismatch does not only increase banks' currency risk when the proportion of dollar-denominated loans with respect to local-denominated loans increases but also it increases their clients' default risk if depreciation occurs. This paper investigates the profitability of 36 dollarized banking systems. Results suggest that after controlling for some macroeconomic and institutional variables, dollarization, as the currency mismatch hypothesis suggests, depresses bank performance and lowers bank profitability. Results also show that the effect of institutions more than offsets the negative impact of dollarization on banks' profitability.     

腐败对银行不良贷款的影响--基于中国省级动态面板数据GMM方法

运用动态GMM回归方法,探讨了2005－2013年我国各地区腐败与银行不良贷款之间的关系,结果表明：腐败程度与银行不良贷款规模正相关。同时,银行信贷规模增加会导致不良贷款增加,而经济发展水平、非国有化程度提高,政府干预程度以及企业资产负债率提高都能抑制我国银行业不良贷款增加。据此,提出如下政策建议：继续加大对腐败案件的查处力度,完善相关法律法规体系;商业银行应建立科学有效的风险防范机制;政府职能应由干预型向服务型转变,在提高经济增速的同时加快提高经济非国有化程度;企业应合理利用银行贷款,控制贷款资金流向。