TY - JOUR
T1 - The effect of abnormal institutional attention on bank loans
AU - Huang, Yin Siang
AU - Bui, Dien Giau
AU - Lin, Chih-Yung
AU - Robin,
N1 - Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2022/1
Y1 - 2022/1
N2 - We investigate whether abnormal institutional attention (AIA, measured following Ben-Rephael, Da, and Israelsen, 2017) influences bank loans. First, we find that AIA is positively related to borrowers’ cumulative abnormal returns around loan announcements. Second, banks charge a significantly lower loan spread, require less collateral, and approve larger loans for borrowers with higher AIA. Third, the effect of AIA becomes stronger when borrowers have high information asymmetry and weak market competition. Overall, our findings support the idea that banks consider AIA information when making lending decisions.
AB - We investigate whether abnormal institutional attention (AIA, measured following Ben-Rephael, Da, and Israelsen, 2017) influences bank loans. First, we find that AIA is positively related to borrowers’ cumulative abnormal returns around loan announcements. Second, banks charge a significantly lower loan spread, require less collateral, and approve larger loans for borrowers with higher AIA. Third, the effect of AIA becomes stronger when borrowers have high information asymmetry and weak market competition. Overall, our findings support the idea that banks consider AIA information when making lending decisions.
KW - Bank loan contracts
KW - Cumulative abnormal returns
KW - Financing cost
KW - Institutional attention
KW - Loan announcements
UR - http://www.scopus.com/inward/record.url?scp=85121836343&partnerID=8YFLogxK
U2 - 10.1016/j.intfin.2021.101458
DO - 10.1016/j.intfin.2021.101458
M3 - Article
AN - SCOPUS:85121836343
SN - 1042-4431
VL - 76
JO - Journal of International Financial Markets, Institutions and Money
JF - Journal of International Financial Markets, Institutions and Money
M1 - 101458
ER -