The effects of the bank - internal ratings on the loan maturity
نویسندگان
چکیده
The paper focuses on the effects of three different internal bank ratings – Risk-, Propertyand Creditworthiness-Rating – on the loan maturity. We use a sample of about 5,000 loans given to sole proprietors and corporate borrowers by two German banks from January 2003 till July 2005. The estimation results for corporate borrowers are consistent with Diamond’s (1991) predictions of non-monotonic relationship between ratings and maturity. The best rated and the worst rated loans tend to have shorter maturities than loans with an intermediate rating. However, our results for sole proprietors conflict with the predictions of Diamond and with the majority of the empirical literature. We find a negative association between ratings and maturity of the loans given to sole proprietors. JEL: C25, D82, G20
منابع مشابه
The Impact of Monetary Sector Development on Iranian Banks’ Loan Supply
Banks play an important role in economic development. The access to bank financing allows many firms to carry out investment projects, which prompt economic development. Numerous studies have underlined that monetary policy is a key element in determining banks’ loan supply. Monetary development raises the scope of monetary policy and improves policy performance. This study examines the effec...
متن کاملUsing Loan Rates to Measure and Regulate Bank Risk: Findings and an Immodest Proposal
There is strong evidence that the interest rates charged by banks on the flow of newly extended Commercial & Industrial (C&I) loans predict future loan performance and CAMEL rating downgrades by bank supervisors. While internal risk ratings have little explanatory power for future loan performance, they do help predict future CAMEL downgrades. These findings suggest that supervisors might consi...
متن کاملThe effect of Iranian banks\' merger on structure of loans
Iranian banking network policymakers are focused on bank consolidation as one of the reform policies in recent years. But before merging banks, it is necessary to examine their effects. Loans are one crucial item in the bankschr('39') balance sheets that are affected by bank consolidation. In the Iranian banking network, loans are offered to various economic sectors. What is important for banki...
متن کاملLoan Portfolio Diversification, Market Structure and Financial Stability of Banks
The purpose of this study is to investigate the effect of bank loan portfolio diversification and market structure on the financial stability of banks in the countrychr('39')s capital market. In order to achieve the above goal, the financial data of 17 banks have been used as unbalanced panels in the period from 2005 to 2018. In this study, data analysis was performed using fixed effects model...
متن کاملCertification and Borrower Outcomes: Evidence from the Introduction of Bank Loan Ratings
I exploit the introduction of syndicated bank loan ratings by Moody’s and Standard & Poor’s in 1995 to examine (a) which firms value certification by a third-party ratings agency, and (b) the effects of certification on financial and real outcomes of borrowers. I find evidence that larger and younger borrowers are more likely to obtain bank loan ratings, but only if they do not have a credit ra...
متن کامل