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Owner’s financial expertise and Resubmitted Approved Loan Proposal in the Indian banks at the loan inception stage

Author

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  • Pankaj Kumar Baag

    (Indian Institute of Management Kozhikode)

Abstract

We empirically evidenced that the owner’s financial expertise is different and comparatively less with respect to resubmitted approved loan proposal in the Indian banks at the loan inception stage, with proper control for resubmission and non-resubmission of loan proposals at the time of approval of these loans using primary data sample of 575 corporate accounts spread over a period of 15 years collected from Indian banks. The finding of this study implies that borrowers with comparatively less promoter’s financial expertise in self-interest will avoid violating core covenants at the inception stage of a loan to get the loans approved. There is evidence of earnings management with respect to resubmitted loan proposal which are approved. Banks should take this information into account while disbursing loan and framing credit policies.

Suggested Citation

  • Pankaj Kumar Baag, 2017. "Owner’s financial expertise and Resubmitted Approved Loan Proposal in the Indian banks at the loan inception stage," Working papers 233, Indian Institute of Management Kozhikode.
    • Handle: RePEc:iik:wpaper:233
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    File URL: https://iimk.ac.in/websiteadmin/FacultyPublications/Working%20Papers/233abs.pdf?t=29
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    More about this item

    Keywords

    Owner’s financial expertise; earnings management; corporate governance; loan covenants;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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