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Bank loan terms and conditions: Is there a macro effect?

Seraina Anagnostopoulou and Konstantinos Drakos

Research in International Business and Finance, 2016, vol. 37, issue C, 269-282

Abstract: We examine whether macroeconomic factors contain significant information for bank loan contracting terms and conditions (T&Cs), over and above that of standard firm-specific or country-level institutional factors. Our estimation is based on a seemingly unrelated mixed-processes methodology that accommodates two salient data properties: (i) the fact that loan contract terms are determined jointly as a single lending contract, and (ii) the fact that the elements of loan T&Cs are generated by different distributional formats. Our findings indicate that cross-country variation accounts for a significant portion of observed variation in loan T&Cs. In addition, macroeconomic fundamentals significantly explain the “package” of loan T&Cs offered to corporate borrowers, with this effect being distinct from any influence that T&Cs receive from firm-specific factors, and also from country-specific institutional factors.

Keywords: Bank lending; Loan pricing; Loan terms and conditions; Macroeconomic effects (search for similar items in EconPapers)
JEL-codes: E43 G21 G32 M41 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.ribaf.2015.11.012

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