The effect of abnormal institutional attention on bank loans

Yin-Siang Huang, Dien Giau Bui, Chih-Yung Lin and Robin,

Journal of International Financial Markets, Institutions and Money, 2022, vol. 76, issue C

Abstract: We investigate whether abnormal institutional attention (AIA, measured following Ben-Rephael, Da, and Israelsen, 2017) influences bank loans. First, we find that AIA is positively related to borrowers’ cumulative abnormal returns around loan announcements. Second, banks charge a significantly lower loan spread, require less collateral, and approve larger loans for borrowers with higher AIA. Third, the effect of AIA becomes stronger when borrowers have high information asymmetry and weak market competition. Overall, our findings support the idea that banks consider AIA information when making lending decisions.

Keywords: Institutional attention; Bank loan contracts; Financing cost; Loan announcements; Cumulative abnormal returns (search for similar items in EconPapers)
JEL-codes: G32 G33 G34 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:76:y:2022:i:c:s1042443121001669

DOI: 10.1016/j.intfin.2021.101458

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