Capital market reactions to project finance loans

Manel Kammoun, Gabriel J. Power and Djerry C. Tandja M

Finance Research Letters, 2022, vol. 45, issue C

Abstract: Theory predicts that bank loan announcements could increase share prices of loan recipients through a certification effect. We provide complementary evidence using the novel market setting of project finance loans. Since the loans are off-balance-sheet, there should be no certification effect. Applying an event study methodology and the Carhart 4-factor model to a large international dataset, we find that project sponsors do not experience positive abnormal returns after announcements, but lenders do. We also find that sponsors and lenders tend to experience greater equity return volatility after announcements.

Keywords: Syndicated loans; Project finance loans; Announcements; Certification; Carhart model; Volatility (search for similar items in EconPapers)
JEL-codes: D21 D44 H44 H54 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612321001963
Full text for ScienceDirect subscribers only

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:eee:finlet:v:45:y:2022:i:c:s1544612321001963

DOI: 10.1016/j.frl.2021.102115

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().