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AN ANALYSIS OF SYNDICATED LOAN ANNOUNCEMENTS DURING THE GLOBAL FINANCIAL CRISIS
Author(s) -
Gasbarro Dominic,
Le KimSong,
Schwebach Robert G.,
Zumwalt J. Kenton
Publication year - 2017
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/jfir.12134
Subject(s) - financial system , loan , financial crisis , business , syndicated loan , interest rate , information asymmetry , finance , economics , monetary economics , macroeconomics
The recent financial crisis presents an opportunity to examine stock market reactions to syndicated loan decisions reached by borrowers and lenders regarding loan type and loan purpose. We find that during the crisis, the renegotiation flexibility provided by revolving credit is positively valued, whereas during the low‐interest‐rate period following the crisis, both revolving and term loans are viewed favorably. We also examine information asymmetry effects and find that after the crisis, low‐creditworthy borrowers generate a positive market response, but during the crisis, high‐creditworthy borrowers are viewed positively and low‐creditworthy borrowers are punished by the market.