Download This PaperBusiness Strategy and Cost of Bank Loans
16 Pages Posted: 10 May 2021
Date Written: May 7, 2021
Abstract
Following Miles and Snow’s Business Strategy (BS) topology, we find that banks impose
relatively higher loan spreads for the firms that follow an Innovation-Oriented Business Strategy
(IOBS). We further document that IOBS is positively associated with corporate risk measures such
as variances in equity returns and returns on assets. Overall, our findings suggest that banks charge a higher cost of debt in anticipation of borrowers’ payback riskiness from an IOBS.
Keywords: Business Strategy, cost of bank loan, loan spreads, prospectors, corporate risk
JEL Classification: G21, G32, O31
Suggested Citation: Suggested Citation
Amin, Md Ruhul and Masum, Abdullah Al, Business Strategy and Cost of Bank Loans (May 7, 2021). Available at SSRN: https://ssrn.com/abstract=3841664 or http://dx.doi.org/10.2139/ssrn.3841664
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