Lending relationships and loan contract terms: does size matter?
When does the prime rate change?
The hedging performance of ECU futures contracts
Ownership structure, deregulation, and bank risk taking
Who changes the prime rate?
Specialization in Banking
Using highly detailed data on the loan portfolios of large U.S. banks, we document that these banks "specialize" by concentrating their lending disproportionately into one industry. This specialization improves a bank’s industry-specific knowledge and allows it to offer generous loan terms to borrowers, especially to firms with access to alternate sources of funding and during periods of greater nonbank lending. Superior industry-specific knowledge is further reflected in better loan and, ultimately, bank performance. Banks concentrate more on their primary industry in times of instability ...
The role of financial advisors in merger and acquisitions
This paper looks at the role of commercial banks and investment banks as financial advisors. Unlike some areas of investment banking, commercial banks have been allowed to compete directly with traditional investments banks in this area. In their role as lenders and advisors, banks can be reviewed as serving a certification function. However, banks as lenders and advisors also have a potential conflict of interest that may mitigate their certification function. Overall, it is found that the certification effect dominates the conflict of interest effect and that the certification effect is ...
The Myth of the Lead Arranger’s Share
We make use of Shared National Credit Program (SNC) data to examine syndicated loans in which the lead arranger retains no stake. We find that the lead arranger sells its entire loan share for 27 percent of term loans and 48 percent of Term B loans, typically shortly after syndication. In contrast to existing asymmetric information theories on the role of the lead share, we find that loans that are sold are less likely to become non-performing in the future. This result is robust to several different measures of loan performance and is reflected in subsequent secondary market prices. We ...