Do firms' relationships with principal customers/suppliers affect shareholders' income?

In this paper, we examine whether a firm's relationship with its principal customers/suppliers affects its payout policies. A firm has customer–supplier relationships when its business depends on a small number of major customers/suppliers. The extant literature indicates two channels through which customer–supplier relationships might negatively affect a firm's dividend payments: 1) the high financial distress costs associated with relationship-specific investments and 2) the information certification effect of the principle customer. Consistent with expectations, our study reveals a negative relationship between a firm's dependence on customer–supplier relationships and its dividend payments. This result is robust to various model specifications and consistent with evidence regarding the time-series properties of dividends. Moreover, we find that high financial distress costs associated with relationship-specific investments are the key channel through which a firm's customer–supplier relationship affects its dividend payments. Overall, our results suggest that a firm's relationship with its non-financial stakeholders, such as principal customers/suppliers, is an important determinant of its shareholders' income.     

Corporate Tax Enforcement Externalities and the Banking Sector

We explore whether corporate tax enforcement can affect bank lending. Specifically, we hypothesize that tax enforcement efforts aimed at small and midsized enterprises (SME) can improve their information environments, which in turn could lead to increased bank commercial lending. Exploiting the regional structure employed by the IRS until 1999, we find that the corporate tax return audit probability for SMEs is associated with greater commercial lending growth for regionally focused banks. We find similar evidence when exploiting the IRS reorganization from a regional to federal system in 2000. Further results show that tax enforcement's impact on SME informational environments is at least partially responsible for this association: The impact of tax auditing on bank lending is stronger for banks facing greater informational disadvantages and in areas where SMEs face greater hold-up problems. Finally, we find that the tax audit rate is positively associated with loan portfolio quality, suggesting that tax enforcement can lead to better loan decisions. Our findings are consistent with the tax authority's mandate having important externalities on bank lending and SME access to capital, suggesting that the benefits to tax enforcement go beyond improving tax collection.     

Loan guarantees and credit supply

The efficiency of federal lending guarantees depends on whether guarantees increase lending supply or simply act as a subsidy to lenders. We use notches in the guarantee rate schedule for Small Business Administration (SBA) loans to estimate the elasticity of bank lending volume to loan guarantees. We show significant bunching in the loan distribution on the side of the size threshold that carries a more generous loan guarantee. The excess mass implies that increasing guarantee generosity by one percentage point of loan principal would increase per-loan lending volume by $19,000. Excess mass increases in periods with guarantee generosity, and placebo results indicate that the effect disappears when the guarantee notch is eliminated.     

Capital ratios and bank lending: A matched bank approach

This paper examines the impact of bank capital ratios on bank lending by comparing differences in loan growth to differences in capital ratios at sets of banks that are matched based on geographic area as well as size and various business characteristics. We argue that such comparisons are most effective at controlling for local loan demand and other environmental factors. For comparison we also control for local factors using MSA fixed effects. We find, based on data from 2001 to 2011, that the relationship between capital ratios and bank lending was significant during and shortly following the recent financial crisis but not at other times. We find that the relationship between capital ratios and loan growth is stronger for banks where loans are contracting than where loans are expanding. We also show that the elasticity of bank lending with respect to capital ratios is higher when capital ratios are relatively low, suggesting that the effect of capital ratio on bank lending is nonlinear. In addition, we present findings on the relationship between bank capital and lending by bank size and loan type.     

Securitization without adverse selection: The case of CLOs

In this paper, we investigate whether securitization was associated with risky lending in the corporate loan market by examining the performance of individual loans held by collateralized loan obligations. We employ two different data sets that identify loan holdings for a large set of CLOs and find that adverse selection problems in corporate loan securitizations are less severe than commonly believed. Using a battery of performance tests, we find that loans securitized before 2005 performed no worse than comparable unsecuritized loans originated by the same bank. Even loans originated by the bank that acts as the CLO underwriter do not show under-performance relative to the rest of the CLO portfolio. While some evidence exists of under-performance for securitized loans originated between 2005 and 2007, it is not consistent across samples, performance measures, and horizons. Overall, we argue that the securitization of corporate loans is fundamentally different from securitization of other assets classes because securitized loans are fractions of syndicated loans. Therefore, mechanisms used to align incentives in a lending syndicate are likely to reduce adverse selection in the choice of CLO collateral.     

银行在公司控制权市场中的作用研究——来自中国上市公司的证据

本文以我国上市公司中26例最为接近市场收购行为的要约收购作为样本,实证检验了我国银行贷款强度对公司成为收购目标的可能性和收购成功率的影响。研究发现,银行贷款强度与公司成为收购目标的可能性和收购成功率之间呈显著负相关关系。这一结果的政策含义在于,随着我国资本市场的完善,银行可以通过控制权市场加强对公司的治理。     

Major government customers and loan contract terms

Review of Accounting Studies - We examine the relation between the presence of U.S. government as a major customer and a supplier firm’s loan contract terms, using major corporate customers...     

汇率敏感性会影响企业贷款利率吗？——基于中国上市公司的分析

本文基于中国A股上市公司2009-2018年的数据,测算了企业价值对人民币汇率变动的敏感性。在此基础上,实证检验了汇率敏感性(企业价值对汇率变动的敏感程度)对企业贷款利率的影响和作用机制。研究发现:汇率敏感性与企业贷款利率之间显著正相关,且这种关系在拥有境外收入、境外投资和使用外汇衍生品的公司中更加显著。进一步分析发现,对于存在密切银企关系、较大的股东债权人利益冲突以及抵押品价值较低的企业,汇率敏感性与贷款利率之间的正相关关系更加显著。本文研究结果表明,随着我国市场化改革的进一步深化,贷款利率将会更加显著地反映企业的汇率敏感性特征。这种效应对于存在海外业务、银行更了解借款公司信息,以及违约可能性更高的公司更加明显。本文研究对于增强我国企业应对汇率风险能力,完善金融机构风险定价能力,引导金融机构服务实体企业具有一定参考意义。     

Earnings performance of major customers and bank loan contracting with suppliers

Using a sample of 3725 loan facility–years for supplier firms that have financial data on their major customers during the period 1995–2011, this study investigates whether the earnings performance of major customers has effect on the price and nonprice terms of loans to the supplier firms. We find that various contracting terms are more favorable for loans to supplier firms whose major customers have higher return on assets (ROA). More importantly, we find that the effect of major customers’ earning performance on loan contracting terms is weaker for the borrowers with prior loan relationships with banks, while it is stronger for the borrowers that are highly dependent on their major customers. Our results suggest that banks take into account major customers’ earnings performance when contracting with their supplier firms, and the informativeness of customer earnings varies with the nature and strength of the customer–supplier relationships.     

Explicit deposit insurance design: International effects on bank lending during the global financial crisis✰

Studies find that during the 2007–2009 global financial crisis, loan spreads rose and corporate lending tightened, especially for foreign borrowers (a flight-home effect). We find that banks in countries with explicit deposit insurance (DI) made smaller reductions in total lending and foreign lending, experienced smaller increases in loan spreads, and had quicker post-crisis recoveries. These effects are more pronounced for banks heavily relying on deposit funding. Evidence also reveals that more generous or credible DI design is associated with a stronger stabilization effect on bank lending during the crisis, confirmed by the difference-in-differences analysis based on expansion of DI coverage during the crisis. The stabilization effect is robust to the use of country-specific crisis measures and control of temporary government guarantees.     

The impact of monetary policy on the financing behaviour of firms in the Euro area and the UK

Abstract

According to the ‘broad credit view’ bank-dependent firms are more strongly affected by monetary contractions than firms with access to non-bank forms of external finance. Within the credit view the bank lending channel focuses on the special role of bank loans, and predicts that monetary contractions reduce loan supply to firms facing information problems. However, the ‘relationship lending channel’ argues that, especially in bank-based economies, bank-dependent firms have close ties with banks, which may reduce the sensitivity of their use of bank debt to monetary shocks. The sensitivity of corporate debt structures to changes in the monetary policy stance is analysed using a sample of 22,000 firms in the Euro area and the UK. Evidence is found for the credit view, the relationship lending channel, but not for the bank lending channel.     

借贷便利创新工具有效影响了商业银行贷款利率吗？

本文基于手工收集的2009—2017年中国银行业数据,利用我国借贷便利工具创新这一准自然实验,以借贷便利工具的运用需要商业银行提供合格担保品这一要求为切入点,考察了借贷便利工具对商业银行贷款利率的影响。研究发现,借贷便利工具创设后,商业银行持有的合格担保品规模越大,其贷款利率越低,且这一效应随着时间推移逐渐增强。进一步的作用机制检验发现,央行的借贷便利操作扩大了商业银行向中央银行借款规模和贷款投放规模,从而有效降低了商业银行贷款利率,也表明借贷便利工具可通过商业银行合格担保品渠道发挥作用。因此,可以通过调整借贷便利操作规模、操作利率以及合格担保品范围的方式有效影响商业银行贷款利率进而发挥对社会融资成本的调控作用。     

Bringing the environment into bank lending: implications for environmental reporting

In recent years, it has come to be recognised that banks' lending operations affect, and are affected by, the state of the natural environment. In particular, rising public concern about the state of the natural environment, as reflected in legislation and consumer attitudes, poses risks for the state of a bank's lending portfolio. Even if they are not directly concerned about the environment, banks therefore have an incentive to understand the environmental implications of their lending decisions. This generates a potential demand for environmental information on companies.This paper reports on empirical research conducted to explore the interface between bank lending and the demand for environmental information. Based on a postal questionnaire survey of banks engaged in corporate lending in the UK, supplemented by a programme of semi-structured interviews, it reports on: the extent to which UK banks incorporate environmental considerations into their corporate lending decisions; the sources of information used by banks when making corporate lending decisions which involve environmental considerations; and lending bankers' views on developments in environmental reporting.The results indicate, inter alia, the importance that bankers attach to the annual report, notwithstanding its traditional limitations as a source of information on corporate environmental impact, and some desire for extensions to environmental disclosure. However, those desired developments are relatively narrow in scope, mirroring banks' principal interest in protecting their loans, and tend not to extend to more comprehensive forms of environmental disclosure such as might be expected to be found in a separate corporate environmental report.     

Analytical Solutions for Expected Loss and Standard Deviation of Loss with an Additional Loan

We evaluate the expected loss and the standard deviation of loss of a bank loan, considering the bank’s strategic control of the expected return on the loan. Assuming that the bank supplies an additional loan to minimize the expected loss of the total loan, we provide analytical formulations for the expected loss and the variance of loss with bivariate normal distribution functions. Using a given expected growth rate and interest rates, two thresholds for the asset/liability ratio can specify three cases. The bank supplies an additional loan to decrease the expected loss in two cases: (i) the asset/liability ratio of the firm is low, and its expected growth rate is high; and (ii) the asset/liability ratio of the firm is high, and the lending interest rate is high. The bank maintains the current loan amount when the asset/liability ratio lies between the two thresholds. Depending on the bank’s strategy, the bank can decrease the initial expected loss of the loan. Conversely, the bank would face a greater risk of the standard deviation of loss.     

Distance, Lending Relationships, and Competition

We study the effect on loan conditions of geographical distance between firms, the lending bank, and all other banks in the vicinity. For our study, we employ detailed contract information from more than 15,000 bank loans to small firms comprising the entire loan portfolio of a large Belgian bank. We report the first comprehensive evidence on the occurrence of spatial price discrimination in bank lending. Loan rates decrease with the distance between the firm and the lending bank and increase with the distance between the firm and competing banks. Transportation costs cause the spatial price discrimination we observe.     

Suppliers’/customers’ production efficiency uncertainty and firm credit risk

This study explores the effects of business counterparties’ (i.e. suppliers’/customers’) production efficiency uncertainty (PEU) on corporate credit risk by employing American bond observations of manufacturing firms. Empirical results of this study show that customers’ PEU is positively related to corporate bond yield spreads whereas suppliers’ has an opposite effect. The former result shows the importance of demand uncertainty while the latter one suggests that the benefits of supply chain integration or information sharing exceed the costs of supply chain uncertainty. We also find that the effects of suppliers’/customers’ PEUs on bond yield spreads are significantly affected by the information flow risk within the supply chain. In addition, the customer-side effect becomes weaker during the financial crisis period, whereas the supplier-side one is insignificantly affected. These empirical results are robust when controlling for potential endogeneity problems and employing an alternative sample which consists of the bond observations with both supplier and customer identification information. Finally, it has to be noticed that our conclusions are only applicable to manufacturing industries.     

Evidence of a bank lending channel in the UK

Using balance sheet data for a panel of UK listed firms, we find evidence of a bank lending channel of monetary transmission. A higher interest rate induces more bank lending to listed companies, but this effect diminishes if monetary policy becomes tight enough to impose severe constraints on bank loan lending. The dynamic behaviour of bank debt versus non-bank debt shows that the lending channel works through cutting back loan supplies to small, bank-dependent firms while restricting the bank’s ability to provide financial assistance to other firms. We see cross-sectional differences between bank-dependent and non-bank-dependent listed companies, and between listed and non-listed companies: Both can contribute to the size effect of investment. Small firms bear most of the reductions in bank loan supplies, and since they do not have many alternatives to bank finance, they suffer more from monetary tightening than big firms. This is consistent with inventory behavior. Furthermore, we have found that big, non-bank-dependent firms can benefit more from the bank–firm relationship than small, bank-dependent firms.     

Corporate capital structure and the characteristics of suppliers and customers

We investigate the link between a firm's leverage and the characteristics of its suppliers and customers. Specifically, we examine whether firms use decreased leverage as a commitment mechanism to induce suppliers/customers to undertake relationship-specific investments. We find that the firm's leverage is negatively related to the R&D intensities of its suppliers and customers. We also find lower debt levels for firms operating in industries in which strategic alliances and joint ventures with firms in supplier and customer industries are more prevalent. Consistent with a bargaining role for debt, we find a positive relation between firm debt level and the degree of concentration in supplier/customer industries.     

Loan Sales and the Cost of Corporate Borrowing

When a loan is sold, it goes to a lower-cost financing sourcethan its originator. Yet, lending markets are less than perfectlycompetitive. Despite the lower funding cost, therefore, theloan price is not necessarily more favorable to the borrower.However, corporate borrowers are averse to the participationof their loans to other lenders because of the complexity ofdealing with multiple banks and the potential information costsof the sale announcement. Consequently, I conjecture that theborrower extracts a price concession in exchange for allowingthe bank to sell participations in the loan. Using a hand-matcheddataset of loans, borrowers, and lenders, I find that the averageyield spread on loans originated by active loan sellers is about20 basis points lower than the average spread on loans originatedby moderate loan sellers.     

经济政策不确定性与企业贷款成本

基于大样本微观银行信贷数据,本文研究经济政策不确定性对企业的银行贷款成本的影响。研究发现,经济政策不确定性升高导致企业的银行贷款成本增加,且使得在中小型银行贷款的企业成本增加更多。异质性分析表明,经济政策不确定性升高对受政策因素影响较大的企业如小微企业、私营企业等的银行贷款成本的影响更为明显。进一步,对企业的银行贷款违约风险的研究发现,随着经济政策不确定性升高,企业的银行贷款违约风险反而降低。这表明,经济政策不确定性升高使得银行选择风险评级更低的贷款,符合谨慎性动机。本文研究结论表明,经济政策不确定性升高时,银行“自我保险”动机的增强使得企业的银行贷款成本增加,这在中小型银行中表现得更加明显,同时也更多地转嫁给中小企业。本文为经济政策不确定性对企业投资、宏观经济波动等的研究提供了微观解释机制,并揭示了政府经济政策的一致性、稳定性对维护金融稳定的重要作用。