Who gains from credit granted between firms? Evidence from inter-corporate loan announcements made in China

Qing He (), Liping Lu and Steven Ongena

No 529, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: Who gains from inter-corporate credit? To answer this question we measure the impact of the announcements of inter-corporate loans in China on the stock prices of the firms involved. We find that the average abnormal return for the issuers of inter-corporate loans is significantly negative, whereas it is positive for the receivers. Issuing firms may be perceived by investors to have run out of worthwhile projects to finance, while receiving firms are being certified as creditworthy. Subsequent firm performance and investment confirms these valuations as overall accurate.

Keywords: entrusted loan; inter-corporate loan; credit misallocation; certification (search for similar items in EconPapers)
JEL-codes: G14 G21 G30 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cna and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Who gains from credit granted between firms? Evidence from inter-corporate loan announcements made in China (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:529

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