Bank loans and borrower value during the global financial crisis: Empirical evidence from France

Christophe Godlewski

Journal of International Financial Markets, Institutions and Money, 2014, vol. 28, issue C, 100-130

Abstract: We investigate the impact of bank loan announcements on borrower value during the recent boom and bust cycle of the 2000s using a sample of 253 large loans to French borrowers. We find a significant and negative stock market reaction to bank loan announcements during the Global Financial Crisis. Hence, although we document significant changes in bank behavior during the crisis with conservative contractual and organizational modifications, we cannot provide empirical support for the certification value of bank loans during a period of increased informational asymmetries. We propose several explanations based on borrowers’ financial constraints and lenders’ identity. Nevertheless, bank loan announcements for larger firms receiving large loans funded by international pools of lenders contributed to borrower value even during the crisis.

Keywords: Bank loans; Borrower value; Financial crisis; Event study; Syndicated lending; Europe (search for similar items in EconPapers)
JEL-codes: G14 G20 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:28:y:2014:i:c:p:100-130

DOI: 10.1016/j.intfin.2013.10.009

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