When banks borrow: Stock market reactions to loan announcements by financial vs. non-financial firms

Yohan Devillard () and Laurent Weill
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Yohan Devillard: LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg
Laurent Weill: LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg, EM Strasbourg - École de Management de Strasbourg = EM Strasbourg Business School - UNISTRA - Université de Strasbourg, UK - Univerzita Karlova [Praha, Česká republika] = Charles University [Prague, Czech Republic] = Université Charles [Prague, Republique tchèque]

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Abstract: We examine whether the stock market reacts differently to syndicated loan announcements when the borrower is a financial firm as opposed to a non-financial firm. We apply an event study methodology on a large cross-country dataset of nearly 30,000 loan announcements, including over 2600 from financial companies. We find no evidence of systematic difference in market reactions between financial and non-financial companies under normal conditions, suggesting that the informational value of loans does not depend on the type of borrowing firm. However, during the COVID pandemic, reactions diverged sharply: loan announcements were associated with greater abnormal returns for non-financial firms, interpreted as survival signals, but lower abnormal returns for financial firms, reflecting investor concerns about risk and liquidity. These results emphasize that the interpretation of loan announcements can be context-dependent.

Date: 2026-03-07
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Published in Research in International Business and Finance, 2026, 86, pp.103361. ⟨10.1016/j.ribaf.2026.103361⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05615325

DOI: 10.1016/j.ribaf.2026.103361

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