Do banks appraise internal capital markets during credit shocks? Evidence from the Greek crisis
Ioannis Asimakopoulos (),
Dimitrios Malliaropulos and
Nickolaos G. Travlos
Journal of Financial Intermediation, 2021, vol. 45, issue C
Using data of bank loans to Greek firms during the Greek crisis we provide evidence that affiliated firms, having access to the internal capital markets of their associated group, are less likely to default on their loans. Furthermore, banks require lower loan collateral coverage from affiliated firms and are less likely to downgrade the affiliates’ credit profile. Finally, banks are more likely to show forbearance to affiliated firms with non-performing loans. The results are consistent with the view that banks manage their relationships with firms in a business group jointly, as opposed to viewing each firm as an independent entity. Our findings also suggest that the value of risk sharing through internal capital markets increases when external financing is scarce.
Keywords: Internal capital markets; Non-performing loans; Bank relationship; Credit shock (search for similar items in EconPapers)
JEL-codes: C23 G01 G21 G32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:45:y:2021:i:c:s1042957320300097
Access Statistics for this article
Journal of Financial Intermediation is currently edited by Elu von Thadden
More articles in Journal of Financial Intermediation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().