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http://hdl.handle.net/10397/94402
Title: | Debt enforcement and bank loans : evidence from insolvency practices worldwide | Authors: | Lobo, GJ Wang, C Wang, Y Wu, F |
Issue Date: | 2021 | Source: | Asia-Pacific journal of accounting and economics, 2021, v. 28, no. 1, p. 153-182 | Abstract: | Using a novel debt enforcement index reflecting legal and economic characteristics directly relating to resolving insolvency across the world, we document that bank loan terms are more stringent (larger interest rate spread, higher collateral requirement, more covenants) in countries with weaker debt enforcement. The effect is more prominent when creditor rights are better protected and debtors are exposed to higher fundamental and informational risks. Improved enforcement has real effects of reducing borrowers’ covenant violation and enhancing their preference for bank funding. Lenders’ syndicates become more concentrated as loan contract enforceability deteriorates. A difference-in-differences analysis of insolvency resolution reforms worldwide confirms the cross-country evidence. | Keywords: | Debt enforcement Insolvency practice Bank loan contracting |
Publisher: | Routledge, Taylor & Francis Group | Journal: | Asia-Pacific journal of accounting and economics | ISSN: | 1608-1625 | EISSN: | 2164-2257 | DOI: | 10.1080/16081625.2020.1845004 | Rights: | © 2020 City University of Hong Kong and National Taiwan University This is an Accepted Manuscript of an article published by Taylor & Francis in Asia-Pacific Journal of Accounting & Economics on 11 Nov 2020 (published online), available at: http://www.tandfonline.com/10.1080/16081625.2020.1845004 |
Appears in Collections: | Journal/Magazine Article |
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File | Description | Size | Format | |
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Wang_Debt_Enforcement_Bank.pdf | Pre-Published version | 421.87 kB | Adobe PDF | View/Open |
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