IDEAS home Printed from https://ideas.repec.org/a/wly/finmar/v34y2025i3p111-129.html
   My bibliography  Save this article

How Do Banks Respond to Supplier IPOs?

Author

Listed:
  • Sung C. Bae
  • Iftekhar Hasan
  • Liuling Liu
  • Haizhi Wang

Abstract

This paper examines how supplier IPO events affect their key customers’ cost of debt. The evidence reveals that average loan spreads for customers increase by roughly 20% (23.7 basis points) following suppliers’ IPO events. This negative spillover effect is more pronounced when suppliers make significant relationship‐specific investments (high switching cost), when suppliers face less concentrated customer bases, or when customers face more concentrated supplier bases. Our results show that customers receive less favourable trade terms and are forced to pay more for inputs after their suppliers go public, all of which increase customers’ operational costs, risk and subsequent borrowing costs. Furthermore, we document that customer loan contracts become significantly more restrictive after a supplier's IPO. Finally, we find that the observed negative spillover effect is also present in customers’ access to the public bond market.

Suggested Citation

  • Sung C. Bae & Iftekhar Hasan & Liuling Liu & Haizhi Wang, 2025. "How Do Banks Respond to Supplier IPOs?," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 34(3), pages 111-129, August.
    • Handle: RePEc:wly:finmar:v:34:y:2025:i:3:p:111-129
    DOI: 10.1111/fmii.12212
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/fmii.12212
    Download Restriction: no
    File URL: https://libkey.io/10.1111/fmii.12212?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:finmar:v:34:y:2025:i:3:p:111-129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.