Bank dependence in emerging countries: Cross-border information percolation in mutual fund equity investing

Linda Allen (), Suparna Chakraborty (), Sonali Hazarika () and Chih-Huei Su ()
Additional contact information
Linda Allen: CUNY
Suparna Chakraborty: University of San Francisco
Sonali Hazarika: CUNY
Chih-Huei Su: University of St. Thomas- Houston

Journal of International Business Studies, 2020, vol. 51, issue 2, No 4, 218-243

Abstract: Abstract In contrast to the literature involving U.S. bank domestic lending, we find that mutual funds affiliated with lending banks reduce their equity investment and turnover in the non-U.S.-listed stock of their non-U.S. borrowers compared to non-lending banks or unaffiliated mutual funds. Reduced equity holdings increase loan spreads, preserving the lending bank’s cross-border information monopoly. Equity market holdings and turnover are reduced when banks lend to firms in emerging nations and when the geographic distance between the lender and the mutual fund manager is greatest. Thereby, long-range information percolation may benefit global institutions at the expense of individual subsidiaries.

Keywords: insider information; syndicated bank loans; international mutual fund investing (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1057/s41267-019-00273-1 Abstract (text/html)
Access to full text is restricted to subscribers.

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:pal:jintbs:v:51:y:2020:i:2:d:10.1057_s41267-019-00273-1

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

DOI: 10.1057/s41267-019-00273-1

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().