The impact of financial crises on the syndicated loan spreads applied to public and private firms

Drago, Danilo; Gallo, Raffaele

doi:10.1016/j.jfs.2019.100718

Cited by 9 publications

(14 citation statements)

References 28 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Existing literature finds evidence of a greater increase in loan spreads for European companies during the global financial crisis and the euro area sovereign debt crisis [74]. At the same time, we expect that, all other things being equal, in crisis periods, lenders are less sensitive to information related to the borrower's CSP, and they assign greater importance to the borrower's financial data.…”

Section: Conflicts Of Interestmentioning

confidence: 85%

Do CSR Ratings Affect Loan Spreads? Evidence from European Syndicated Loan Market

Drago

Carnevale

2020

Sustainability

Self Cite

View full text Add to dashboard Cite

We investigate whether corporate social responsibility (CSR) ratings affect the syndicated loan spreads paid by European listed firms. By performing ordinary least squares (OLS) pooled regressions on a sample of 1101 syndicated loans granted to European companies, we find evidence that borrowers’ CSR ratings have a significant impact on loan spreads. However, the relationship between CSR ratings and loan spreads is quite complex. Low CSR-rated firms pay higher loan spreads than better CSR-rated firms, but high CSR ratings are not always rewarded by lenders. The benefits of a high CSR rating level are significant only for firms located in countries that pay great attention to sustainability issues. Overall, our work provides a key to reconciling the mixed results obtained in the empirical literature, as we find evidence of a significant lack of homogeneity within the European Union countries regarding the relationship between CSR performance and the cost of debt financing.

show abstract

Section: Conflicts Of Interestmentioning

confidence: 85%

Do CSR Ratings Affect Loan Spreads? Evidence from European Syndicated Loan Market

Drago

Carnevale

2020

Sustainability

Self Cite

View full text Add to dashboard Cite

show abstract

“…Infusing relationship marketing into retail financial services is leading more banks to adopt relationship banking as their prime ingredient of marketing strategy. The central thesis of relationship marketing is that by investing in marketing activities that enhance relationship quality, customers will respond with forming strong loyalty and be more voluntarily inclined to engage in positive Word-of-Mouth (Drago and Gallo, 2020;Palmatier et al, 2006), thereby increasing customer equity (Vogel et al, 2008). This study extends this framework by focusing on results of marketing practices and past customer behavior in forming loyalty and positive WoM to retain customers (Verheof, 2003) by investigating the extent to which three major dimensions of relationship characteristics, namely relationship length, width and width, that evolve over the course of relationship between the bank and their customers can influence the linkages between relationship quality and relational outcomes.…”

Section: Discussionmentioning

confidence: 99%

“…Unlike transactional bank marketing that relies on hard data to segment the market and aggressive promotions to acquire new customers, relationship banking is a long-term customercentric strategy that capitalizes on the flow of rich and proprietary data during the customer-bank relationships to better judge credit worthiness and to provide wellcustomized financial product offerings (Lončarski and Marinč, 2019). By doing so, banks can develop strong client relationships with better customer lifetime value, can employ accumulated knowledge about their customers to better structure their marketing programs to fit each segment, and protect their clients from market shocks while keeping clients loyal (Drago and Gallo, 2020). To this end, it's not surprising that marketing investments in creating exceptional long-term relationship is outpacing brand spending both for offline and online channels (Steinhoff et al, 2019), especially as client defection in retail banking is well-known chronic problem (du Toit et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

Customer Relationships in Banking: Does relationship strength influence relationship quality and outcomes?

Al-Wugayan¹

2020

SBE

View full text Add to dashboard Cite

This study investigates how customer-bank relationship strength dimensions, reflected by relationship length, depth and width, influence the associations between customer-perceived relationship quality and relational outcomes in retail bank service industry. To date, it’s still unclear whether relationship strength could contribute to, or detract from, customer relationship quality and outcome. A total of 2,029 bank customers in Kuwait are surveyed and data collected is analyzed using PLS-SEM modeling to validate the proposed conceptual framework followed by Multi-Group Analysis to test study hypotheses. Obtained findings show that the linkages between relationship quality components (satisfaction, trust and commitment) and relational outcomes (loyalty and Word-of-Mouth) are affected by the level of relationship length and depth, while relationship width only influenced the association between satisfaction and relational quality. The inclusion of relationship strength that represents past customer behavior provides a more accurate and comprehensive view of the dynamics of the interrelationship between key antecedents and consequences of relationship marketing in the retail banking industry.

show abstract

“…Many factors can affect the cost of a syndicated loan. Based on research conducted by Wang et al [8] and Drago and Gallo [6], the number of lenders has significant negative results on loan interest. The increase in the number of lenders aims to increase monitoring effectiveness, which allows the risk premium to decline along with the associated loan risk.…”

Section: Introductionmentioning

confidence: 99%

“…Some of which are in Africa, Latin America, Southeast Asia, North Asia, and China [1,3,4]. This is understandable as the largest markets for syndicated loans are located in the US and Western Europe [5,6]. The economic growth rates in ASEAN countries are considerably high, thus attracting foreign funds flew to Indonesia, Thailand, and Vietnam specifically.…”

Section: Introductionmentioning

confidence: 99%

Factors Affecting Syndicated Loan Spreads in Indonesia, Thailand, and Vietnam

Bryan¹,

Marciano²,

Ernawati³

et al. 2022

Advances in Economics, Business and Management Research

View full text Add to dashboard Cite

This study aims to analyze the effect of loan information (i.e., number of lenders, loan amount, and loan maturity) and borrower characteristics (i.e., public, firm size, leverage, and profitability), as well as control variables such as country and year on syndicated loan, spread in public companies and private companies in Indonesia, Thailand, and Vietnam during the 2008–2018 period by calculating the All In Spread Drawn (AISD) of the syndicated loans over LIBOR. This study applied a quantitative approach through the ordinary least squares method on a sample of 389 observations. A total of 118 observations came from public companies, and 271 observations came from private companies. This study shows that syndicated loans given to private companies are more expensive than public companies. However, this can be minimized by increasing the loan exposure for private firms through a larger number of lenders. It can also be seen that public companies with larger assets, higher returns on equity, and borrowing with shorter terms will be subject to lower interest rates. The spreads for syndicated loans are the most expensive in Indonesia, followed by Vietnam and Thailand.

show abstract

The impact of financial crises on the syndicated loan spreads applied to public and private firms

Cited by 9 publications

References 28 publications

Do CSR Ratings Affect Loan Spreads? Evidence from European Syndicated Loan Market

Do CSR Ratings Affect Loan Spreads? Evidence from European Syndicated Loan Market

Customer Relationships in Banking: Does relationship strength influence relationship quality and outcomes?

Factors Affecting Syndicated Loan Spreads in Indonesia, Thailand, and Vietnam

Contact Info

Product

Resources

About