Costly contagion: Evidence from bank loan spreads
Spreads on new corporate loans are significantly higher when the loan originates in the two years surrounding bankruptcy filings by industry rivals. This contagion appears to be an industry, not an economy-wide, phenomenon, and is particularly severe in the middle of industry bankruptcy waves. Furthermore, contagion in loan spreads is mitigated in concentrated industries, consistent with the hypothesis in Lang and Stulz (1992) that bankruptcy filings in concentrated industries can have positive consequences for rivals (increased market share and/or power). There is also some evidence that contagion affects non-spread terms in loan contracts. Evidence of contagion in loan spreads controlling for the financial health of the borrowing firms suggests that loan spread contagion is potentially socially costly, raising the cost of debt capital even for firms that themselves are not likely to enter financial distress.
Bankruptcy Financial distress Contagion Loan spreads
国际会议
大连
英文
1-37
2008-07-02（万方平台首次上网日期，不代表论文的发表时间）