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The Effect of Organization Capital on the Cost of Bank Loans

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  • Danielova, Anna
  • Francis, Bill B.
  • Teng, Haimeng
  • Wu, Qiang

Abstract

We find that organization capital is negatively related to the cost of bank loans. This finding is robust to additional analyses including those that address omitted variable bias and reverse causality. In addition, we find that organization capital reduces all-in-spread-undrawn. When we decompose the bank loan cost, we find that organization capital increases facility fees due to its risk-engendering characteristics. Finally, we find that organization capital is positively associated with a high likelihood of the presence of inventors and innovation output, consistent with the argument that organization capital is embedded in the key talent within a firm.

Suggested Citation

  • Danielova, Anna & Francis, Bill B. & Teng, Haimeng & Wu, Qiang, 2023. "The Effect of Organization Capital on the Cost of Bank Loans," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 58(6), pages 2579-2616, September.
    • Handle: RePEc:cup:jfinqa:v:58:y:2023:i:6:p:2579-2616_10
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    Cited by:

    1. Fung, Hung-Gay & Li, Tongxia & Lu, Chun & Wen, Min-Ming, 2025. "The inevitable disclosure doctrine: A facade or a curse in the CEO labor market," Journal of Banking & Finance, Elsevier, vol. 179(C).
    2. Beuselinck, Christof & Karavitis, Panagiotis & Kazakis, Pantelis & Mouna, Niswatil, 2024. "E-government and corporate tax planning: International evidence," MPRA Paper 122742, University Library of Munich, Germany.
    3. Alice Hsieh & Cheng-Few Lee & Hai-Chin Yu, 2025. "Organizational capital and debt pricing: evidence from bank loans and public bonds," Review of Quantitative Finance and Accounting, Springer, vol. 65(4), pages 1671-1708, November.
    4. Tongxia Li & Chun Lu & Lei Xu, 2024. "The impact of organisation capital on inventory efficiency," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 3751-3779, December.
    5. Charkhchi, Iman & Toscano, Francesca & Tran, Viet, 2025. "The impact of organizational capital on corporate debt maturity structure choices," Economics Letters, Elsevier, vol. 255(C).
    6. Zheng, Chen & Sun, Zhiyue, 2025. "Organisation capital: A key asset for mitigating firm-level climate change exposure," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(3).
    7. Wu, Xufeng & Huang, Ying-Chen & Lin, Chih-Yung, 2025. "Foreign branch and bank lending decisions: Evidence from high-risk borrowers," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    8. Konan Chan & Yanzhi Wang & Hsiao-Lin Yang, 2026. "Organization capital and takeover vulnerability," Review of Quantitative Finance and Accounting, Springer, vol. 66(2), pages 799-829, February.

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