Bank Commercial Loan Fair Value Practices

Market concentration and commercial bank loan portfolios

This paper estimates the relationship between banking market concentration and high-risk portfolio strategies at commercial banks. I use the unprecedented changes in the degree of competition in local banking markets that occurred after 1980 to estimate the impact of market competition on the risk profile of commercial bank lending. I find evidence that increasing concentration has been associa...

Determinants of Commercial Bank Automobile Loan Rates

Are the Loan Loss and Fair Value Components of Bank Income Rationally Priced?

This paper examines if the market rationally prices the loan loss provisions, and the fair value gains and losses of US banks. We also model the discretionary components of loan loss provisions and fair value gains and losses, and test if the discretionary components are priced differently from their non-discretionary counterparts. We find little evidence that the market misprices operating cas...

Nearest Neighbor Classifier Method for Making Loan Decision in Commercial Bank

Bank plays the central role for the economic development world-wide. The failure and success of the banking sector depends upon the ability to proper evaluation of credit risk. Credit risk evaluation of any potential credit application has remained a challenge for banks all over the world till today. Artificial neural network plays a tremendous role in the field of finance for making critical, ...

Hedge Fund Activism and Bank Loan Contracting

Using a large sample of loans initiated by firms targeted by hedge fund activists during 19942008, we show that hedge fund activism has significant impacts on firms’ bank loan contracts. After the targeting announcement and relative to firms that are not targeted, the targeted firms pay significantly higher spreads, are more likely to be required to secure their loans, face more covenant restri...