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Bank Loans with Chinese Characteristics: Some Evidence on Inside Debt in a State-Controlled Banking System.
- Source :
- Journal of Financial & Quantitative Analysis; Dec2011, Vol. 46 Issue 6, p1795-1830, 36p
- Publication Year :
- 2011
-
Abstract
- We study a transitional economy where state-controlled banks make loan decisions based on noisy inside information on prospective borrowers, and may lend to avert unemployment and social instability. In China, poor financial performance and high managerial expenses increase the likelihood of obtaining a bank loan, and bank loan approval predicts poor subsequent borrower performance. Negative event study responses occur at bank loan announcements, particularly for borrowers measuring poorly on quality and creditworthiness, or for lenders or borrowers involved in litigation regarding loans. Our results highlight dilemmas in a state-led financial system and the local stock market’s sophistication in interpreting news. [ABSTRACT FROM PUBLISHER]
- Subjects :
- FINANCIAL research
BANK loans
BANKING industry
FINANCIAL performance
STOCK prices
Subjects
Details
- Language :
- English
- ISSN :
- 00221090
- Volume :
- 46
- Issue :
- 6
- Database :
- Complementary Index
- Journal :
- Journal of Financial & Quantitative Analysis
- Publication Type :
- Academic Journal
- Accession number :
- 71818601
- Full Text :
- https://doi.org/10.1017/S0022109011000433