Credit Rationing for Bad Companies in Bad Years: Evidence from Bank Loan Transaction Data
This paper examines whether or not there is equilibrium credit rationing using Taiwan banks loans' transaction data. Our transaction data are unique since they help us to identify the exact lenders and borrowers, thus reducing the aggregation bias. This paper raises three hypotheses to test equilibrium credit rationing. First, we argue that the loan supply should bend backward to be consistent with equilibrium credit rationing. Second, credit rationing is expected to be more severe in bad years than in good years, suggesting stronger asymmetric information during turbulent days. Third, the asymmetric information is more severe for bad companies than for good companies. Our results support almost all hypotheses except when a bad company is similarly credit rationed as a good company in bad years. Copyright @ 2002 by John Wiley & Sons, Ltd. All rights reserved.
Volume (Year): 7 (2002)
Issue (Month): 3 (July)
|Contact details of provider:|| Web page: http://www.interscience.wiley.com/jpages/1076-9307/|
|Order Information:||Web: http://jws-edcv.wiley.com/jcatalog/JournalsCatalogOrder/JournalOrder?PRINT_ISSN=1076-9307|
When requesting a correction, please mention this item's handle: RePEc:ijf:ijfiec:v:7:y:2002:i:3:p:261-78. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.