In this study, we examine the options market reaction to bank loan announcements for the population of US firms with … traded options and loan announcements during 1996-2010. We get evidence on a significant options market reaction to bank loan … announcements. Our findings appear to be more pronounced for firms with more information asymmetry, lower credit ratings and loans …

We propose a model that links the conditional probability of bank failure to insolvency and liquidity risks, and show … that liquidity risk affects bank failures through systematic and idiosyncratic channels. Empirical results based on U … systematic liquidity risk was a major predictor of bank failures in 2008 and 2009. This finding has important implications for …

In this paper we provide empirical evidence of abnormal returns associated with credit rating changes for a sample of … 264 credit ratings announcements by 43 international and US banks between 2000 and 2012. The banks in the sample have … attribute to the greater impact of a rating change of a US bank on the rest of the local economy. Finally, we report abnormal …

This paper explores the puzzle of inconsistent findings in regard to bank lending decisions and the negative response … to bank loan announcements in China. Using firm performance before and after the lending decisions, adjusted for the … some cases it is no longer related to bank loan size. Specifically, the positive relationship disappears for loans by …

We test whether bank loans change public bond yields. A 10% increase in bank debt raises bond yields by 15bps …, reflecting a trade-off between the benefits of bank cross-monitoring and higher bond risk. This effect is smaller for firms with … no CDS and junk debt, where bank monitoring is most valuable. It is unlikely that firms with bank debt are riskier …

We examine the impact of bank loan announcements on stock liquidity. Using a comprehensive loan announcement sample … announcements. The findings suggest these announcements send positive signals about borrowers to the market that increase liquidity … provision and reduce transaction costs, leading to improved liquidity for borrowers’ stocks. This liquidity improvement is more …