Loans on sale: Credit market seasonality, borrower need, and lender rents

Justin Murfin and Mitchell Petersen

Journal of Financial Economics, 2016, vol. 121, issue 2, 300-326

Abstract: The market for corporate credit is characterized by significant seasonal variation, both in interest rates and the volume of new lending. Firms borrowing from banks during seasonal “sales” in late spring and fall issue at 19 basis points cheaper than winter and summer borrowers. Issuers during cheap seasons appear to have less immediate needs, but are enticed by low rates to engage in precautionary borrowing. High-interest-rate periods capture borrowers with unanticipated, non-deferrable investment needs. Consistent with models of intertemporal price discrimination, seasonality is strongly associated with market concentration among a few large banks with repeated interactions.

Keywords: Credit market competition; Syndicated loans; Seasonality; Intertemporal price discrimination (search for similar items in EconPapers)
JEL-codes: G21 G30 G32 L11 L13 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Working Paper: Loans on sale: Credit market seasonality, borrower need, and lender rents (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:121:y:2016:i:2:p:300-326

DOI: 10.1016/j.jfineco.2015.09.011

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