Creditor Rights, Enforcement, and Bank Loans
We examine whether differences in legal protection affect the size, maturity, and interest rate spread on loans to borrowers in 48 countries. Results show that banks respond to poor enforceability of contracts by reducing loan amounts, shortening loan maturities, and increasing loan spreads. These effects are both statistically significant and economically large. While stronger creditor rights reduce spreads, they do not seem to matter for loan size and maturity. Overall, we show that variation in enforceability of contracts matters a great deal more to how loans are structured and how they are priced. Copyright (c) 2009 the American Finance Association.
Year of publication: |
2009
|
---|---|
Authors: | BAE, KEE-HONG ; GOYAL, VIDHAN K. |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 64.2009, 2, p. 823-860
|
Publisher: |
American Finance Association - AFA |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Equity market liberalization and corporate governance
Bae, Kee-hong, (2010)
-
Creditor rights, enforcement, and bank loans
Bae, Kee-hong, (2009)
-
Equity Market Liberalization and Corporate Governance
Bae, Kee-Hong, (2014)
- More ...