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Author: Tetyana Balyuk
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Languages : en
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Book Description
This Thesis studies whether financial technology (fintech) innovation and loans provided by corporate insiders can mitigate financing frictions and correct market failures in markets with asymmetric information and adverse selection. It consists of five chapters. Chapter 1 outlines the research questions examined in the Thesis and highlights its main findings. Chapter 2 studies the effect of borrowing from peer-to-peer (P2P) lending platforms, a recent fintech innovation in lending, on the supply of credit by traditional credit intermediaries, such as banks, and the demand for credit from banks by consumers. It provides evidence suggesting that this innovation in lending affects the information environment in the credit market and increases access to credit by consumers. Chapter 3 examines loan selection by investors and loan returns in P2P markets. It demonstrates the dominating role of institutional investors in P2P lending, contrasts the loan-picking skill of institutional and retail investors, and discusses the ability of fintech lenders to accurately price and screen loan applications. Chapter 4 studies whether information-intensive debt can benefit corporations by investigating loans provided by corporate insiders, so-called related-party lending, from the perspective of corporate borrowers. It documents characteristics of these loans and shows that they are taken when the information asymmetry between borrowers and external capital providers is likely high. The findings also suggest that other debt providers regard relating-party lending as a signal of credit quality of borrowers. Chapter 5 concludes and discusses avenues for future research.
Author: Tetyana Balyuk
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This Thesis studies whether financial technology (fintech) innovation and loans provided by corporate insiders can mitigate financing frictions and correct market failures in markets with asymmetric information and adverse selection. It consists of five chapters. Chapter 1 outlines the research questions examined in the Thesis and highlights its main findings. Chapter 2 studies the effect of borrowing from peer-to-peer (P2P) lending platforms, a recent fintech innovation in lending, on the supply of credit by traditional credit intermediaries, such as banks, and the demand for credit from banks by consumers. It provides evidence suggesting that this innovation in lending affects the information environment in the credit market and increases access to credit by consumers. Chapter 3 examines loan selection by investors and loan returns in P2P markets. It demonstrates the dominating role of institutional investors in P2P lending, contrasts the loan-picking skill of institutional and retail investors, and discusses the ability of fintech lenders to accurately price and screen loan applications. Chapter 4 studies whether information-intensive debt can benefit corporations by investigating loans provided by corporate insiders, so-called related-party lending, from the perspective of corporate borrowers. It documents characteristics of these loans and shows that they are taken when the information asymmetry between borrowers and external capital providers is likely high. The findings also suggest that other debt providers regard relating-party lending as a signal of credit quality of borrowers. Chapter 5 concludes and discusses avenues for future research.
Author: Hernando Vargas
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ISBN:
Category : Capital costs
Languages : en
Pages : 204
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Book Description
This dissertation explores two subjects. The first one is the relationship between low liquidity in secondary markets for capital and the insufficient supply of long term funding for productive investment. The first chapter shows how shallow or non-existent secondary markets for capital can induce a short term bias in lending, a problem observed in developing countries. A general equilibrium model is developed with government debt and private capital that is costly to trade. The transaction costs reduce the proportion of savings held as capital. Three main results are established. First, larger government deficits cause a greater proportion of savings to be held as debt. Second, deficit finance alternatives (taxes vs. debt) have different effects on investment. And third, a rationale is provided for why intermediation occurs when capital trading is costly. The second subject studied in this dissertation is the effect of incomplete insurance on individual savings. The second chapter compares a two-period-lived, risk-averse agent's optimal consumption decision under complete and incomplete markets in the presence of labor income uncertainty. Initially, markets are completed by Arrow-Debreu securities and a risk-free asset. Then, the market for a contingent claim is closed, and the change in the individual's current consumption is examined, assuming that the prices of the remaining assets are constant. Two results are derived. First, the change in the risk-free asset position is a non-negative fraction of the insurance lost when a contingent claim market is eliminated. Second, if the utility function exhibits constant absolute risk aversion, savings increase whenever an insurance market is removed. If the utility function displays constant relative risk aversion and under complete markets high consumption states are associated with negative insurance, or low consumption states with positive insurance, then the elimination of one contingent claim market increases savings. The third chapter extends some of these results to situations in which markets are initially incomplete, and then a contingent claim market is removed.
Author: Xiaohong Wang
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ISBN:
Category :
Languages : en
Pages : 167
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In the third part of the study, I examine how shocks to banks' financial conditions impact corporate financing and investment decisions during the 2007-2009 financial crisis. I find that average firms relied more heavily on bank credit during the crisis. However, firms whose banks incurred more nonperforming loans used less bank credit when comparing their bank debt before and during the crisis. The reduction on bank debt weren't replaced by alternative financing such as public debt or trade credit. There is some evidence that shocks on banks eventually affected corporate real activities; firms with more adversely affected banks invested less and hoarded more cash during the crisis compared to their pre-crisis level. Overall, my results suggest that adverse shocks on the banking system can curtail bank lending and negatively affect the real sector.
Author: Haekwon Lee
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Category :
Languages : en
Pages : 0
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Category :
Languages : en
Pages :
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Author: Charl Kengchon
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Category :
Languages : en
Pages : 334
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Author: Torsten Ehlers
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Category :
Languages : en
Pages : 107
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Author: Fulvia Fringuellotti
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Category :
Languages : en
Pages :
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Author: Luka Bajec
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Category :
Languages : en
Pages : 78
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Author: Claudia Champagne
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Category :
Languages : en
Pages : 0
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This thesis consists of three essays. The first essay (thesis chapter two) examines the relation between the terms of loans and the borrower's cross-listed situation for samples (un)differentiated by the state of economic development of the home country of the non-U.S. borrower and the distribution method. An important contribution is made to the cross-listing and capital structure literatures by providing evidence that the net benefit from being cross-listed for one debt component of the cost of capital (i.e., private corporate loans) depends upon whether or not the loan is syndicated. All else held equal, foreign borrowers that are cross-listed directly in the U.S. [U.K.] obtain loans with lower spreads [higher amounts] only for non-syndicated loans. Compared to their developed country counterparts, borrowers from emerging economies pay lower spreads and receive higher amounts and longer maturities on non-syndicated loans if cross-listed via Depositary Receipts (American or Global). These favorable effects for cross-listed borrowers are negated or become unfavorable if the loans are syndicated. The second essay (thesis chapter three) studies alliances between financial institutions in the syndicated loan market and finds that the odds of a current syndicate relationship between two lenders depend upon their previous alliances. For example, the odds are significantly higher [lower] and strongest for a current lead-participant relationship with a continuation [reversal] of their previous roles. Specifically, the odds are nearly four times higher when the two lenders have been allied in the previous five years and more than twice higher for every standard deviation increase in the relative number of past alliances. The strength of lead-participant syndicate relationships between two lenders with same-ordered roles is most sensitive to the lead bank's reputation and informationally opaque lenders tend to have stronger relationships with lead banks. Lenders appear to exhibit home bias in their syndicate alliances since ongoing relationships are stronger with domestic counterparts. The third essay (thesis chapter four) examines the impact of past syndicate alliances on the consolidation of financial institutions. The odds of a M & A between two lenders increases when both parties co-participated in previous syndicated loans and with the intensity of such participations during the five-year period prior to the M & A. The impact is higher for international M & As, for cross-industry alliances, and when the acquirer and target are participant and lead, respectively, in the common syndicate relationships. The odds of a particular lender being a target also decreases with increases in the target's leverage and ROE, and increases with increases in the target's size and growth opportunities. The significantly lower short- and long-term performances for both acquirers and targets previously co-involved in past syndicated loans disappear in the presence of various control variables. These control variables account for the less frequent use of cash payment, the greater incidence of divestitures and the higher percentage of shares acquired when the merging parties were co-involved in past loan syndications.
