The Value of Bank Durability: Borrowers as Bank Stakeholders

Myron B Slovin, Marie E Sushka and John A Polonchek

Journal of Finance, 1993, vol. 48, issue 1, 247-66

Abstract: The authors examine the value of bank durability to borrowing firms. The analysis is based on theoretical models of the asset services view of intermediation that imply that private information and associated relationship-specific activities are intrinsic to bank lending. The authors analyze share price effects on firms with lending relationships with Continental Illinois Bank during its de facto failure and subsequent FDIC rescue. They find the bank's impending insolvency had negative effects and the FDIC rescue positi ve effects on client firm share prices. The authors conclude that borro wers incur significant costs in response to unanticipated reductions in bank durability and, thus, are bank stakeholders. Copyright 1993 by American Finance Association.

Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (229)

Downloads: (external link)
http://links.jstor.org/sici?sici=0022-1082%2819930 ... O%3B2-3&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:48:y:1993:i:1:p:247-66

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().