Information Transparency, Lender Protection, and Credit Spread: Evidence from Chinese Debt Market

Sangwhi Lee and Sangsoo Park

International Area Studies Review, 2009, vol. 12, issue 3, 151-168

Abstract: We estimate a model that addresses the spread of syndicated loans originated in China, employing a sample of 144 facilities. We provide empirical evidence that information transparency and lender protection influence the Chinese' borrowing costs in the presence of bond credit rating and other control variables. First, we find that the interest rate spread on a Chinese' syndicated loan is negatively related to the proxies for information transparency. Second, we document an inverse relationship between the spread and lender protection proxies. This empirical evidence demonstrates that the degree and scope of information transparency and lender protection decreases the cost of debt capital to Chinese borrowers.

Keywords: Spread; Syndicated Loan; Information Transparency; Lender Protection; China (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:sae:intare:v:12:y:2009:i:3:p:151-168

DOI: 10.1177/223386590901200309

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