Open AccessSocial Capital and Cost of Bank Loans During the Financial Crisis
Author(s) -
Abdelmajid Hmaittane,
Mohamed Mnasri,
Kais Bouslah,
Bouchra M’Zali
Publication year - 2021
Publication title -
management international
Language(s) - English
Resource type - Journals
eISSN - 1918-9222
pISSN - 1206-1697
DOI - 10.7202/1077787ar
Subject(s) - financial capital , social capital , business , capital (architecture) , economic capital , financial system , cost of capital , exploit , capital adequacy ratio , capital requirement , shock (circulatory) , finance , economics , market economy , human capital , political science , computer security , archaeology , computer science , law , history , incentive , medicine
This study examines the effect of the lender’s social capital on the link between the borrower’s social capital and the cost of bank loans. We exploit the last financial crisis as an exogenous shock to trust during which social capital becomes more valuable. Our findings suggest that when a lender’s social capital is high, borrowers with high social capital pay 46.22 basis points less on their bank loans than those with low social capital.