The Valuation Effects of Bank Loan Ratings in the Presence of Multiple Monitors
نویسندگان
چکیده
Studies have shown that when two information providers or outside auditors exist, the value provided by the second one will be decreased by the actions of the first. Capitalizing on the highly similar functions performed by banks and rating agencies, this paper examines the informational value of the credit ratings of bank loans. Further, it provides evidence on whether rating agencies duplicate the certifying and monitoring roles played by banks. The significant market reaction to negative credit rating announcements found suggests that these rating actions convey information to the capital market beyond that provided via the bank loan approval and renewal process.
منابع مشابه
The 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 کاملThe 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 کاملBank- Firm Relationships: The Case of Iranian Listed Companies
Since the main source of finance for the Iranian manufacturing firms is the bank loan, the bank-firm relationship plays an important role in their performance. In effect, firms with decent financial potency regularly have a better chance to access high-quality and less costly finances. In this paper, we investigate the bank-firm relationship and its determinant factors by using a unique databas...
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 کاملDeposits Funding and Loan Volatility in Iranian Banking System
Banks may well perform differently in lending to firms according to their funding structure. This paper surveys the relation between Loan volatility and deposit in Iranian banking system. The extent to which bank lending is connected to funding structure is affected by the banks’ characteristics (such as capital structure, profitability, and the measure of non-performing loans). To analyze this...
متن کامل