Who gains from credit granted between firms? Evidence from inter-corporate loan announcements made in China

  • Who gains from inter-corporate credit? To answer this question we measure the impact of the announcements of inter-corporate loans in China on the stock prices of the firms involved. We find that the average abnormal return for the issuers of inter-corporate loans is significantly negative, whereas it is positive for the receivers. Issuing firms may be perceived by investors to have run out of worthwhile projects to finance, while receiving firms are being certified as creditworthy. Subsequent firm performance and investment confirms these valuations as overall accurate.

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Author:Qing He, Liping Lu, Steven OngenaORCiDGND
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 529
Series (Serial Number):CFS working paper series (529)
Publisher:Center for Financial Studies
Place of publication:Frankfurt, M.
Document Type:Working Paper
Date of Publication (online):2016/02/15
Date of first Publication:2016/02/15
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2016/04/05
Tag:certification; credit misallocation; entrusted loan; inter-corporate loan
Issue:This Draft: February, 2016
Page Number:67
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht