Bank information monopolies and hold-up effects: International evidence

Wei-Zhong Shi, Yann-Peng Ching, Fok, Robert (Chi-Wing) and Yuanchen Chang

International Review of Economics & Finance, 2023, vol. 83, issue C, 286-311

Abstract: We examine whether hold-up effects are confined to the U.S. market. Using an international sample, we investigate whether firms with access to the public debt market pay lower loan spreads. We hypothesize that when firms issue public bonds, they reveal private information of their credit risk, and thus the monopoly power of inside banks decreases, resulting in lower loan spreads. We find extensive evidence to support this conjecture. We also find that hold-up effects are stronger during recessions and more significant in countries with stringent bank regulations but insignificant during banking crises and the 2007–2008 financial crisis.

Keywords: Hold-up effects; Bank-dependent and non-bank dependent borrowers; Loan spreads (search for similar items in EconPapers)
JEL-codes: F34 G21 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056022002246
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:reveco:v:83:y:2023:i:c:p:286-311

DOI: 10.1016/j.iref.2022.08.026

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().