Abstract

https://ssrn.com/abstract=1914867
 
 

References (26)



 


 



Inter-Market Competition and Bank Loan Spreads: Evidence from The Securities Offering Reform


Matthew Gustafson


Pennsylvania State University - Smeal College of Business

November 1, 2013

24th Australasian Finance and Banking Conference 2011 Paper

Abstract:     
I provide evidence of a new mechanism by which access to public securities mitigates the bank hold-up problem and reduces loan spreads – it increases a borrower’s bargaining power vis-à-vis a lender by offering a bank loan substitute. Difference-in-differences results indicate that loan spreads are sensitive to legislation that makes public securities more attractive. The post-legislation spread reduction is largest for the bank borrowers that benefit most from the legislation. Importantly, the effect is concentrated in credit-rated borrowers taking out term loans and borrowers returning to the bank lending market quickly. Thus, the availability of public securities reduces loan spreads for established borrowers only when it offers a financing substitute and the hold-up problem is severe.

Number of Pages in PDF File: 30

Keywords: Bank Loans, Bank Competition, Banking Relationships, Public Debt Market, Shelf Registrations


Open PDF in Browser Download This Paper

Date posted: August 23, 2011 ; Last revised: November 26, 2013

Suggested Citation

Gustafson, Matthew, Inter-Market Competition and Bank Loan Spreads: Evidence from The Securities Offering Reform (November 1, 2013). 24th Australasian Finance and Banking Conference 2011 Paper. Available at SSRN: https://ssrn.com/abstract=1914867 or http://dx.doi.org/10.2139/ssrn.1914867

Contact Information

Matthew Gustafson (Contact Author)
Pennsylvania State University - Smeal College of Business ( email )
East Park Avenue
University Park, PA 16802
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,048
Downloads: 148
Download Rank: 157,155
References:  26