Financial reforms and the differential impact of foreign versus domestic banking relationships on firm value

Hai Chin Yu; Cheng Few Lee; Ben J. Sopranzetti

doi:10.1142/9789811202391_0025

Financial reforms and the differential impact of foreign versus domestic banking relationships on firm value

Hai Chin Yu, Cheng Few Lee, Ben J. Sopranzetti

Rutgers Business School, Finance & Economics

Research output: Chapter in Book/Report/Conference proceeding › Chapter

Abstract

This study documents a substantial difference in impact on an emerging market firm’s value due to its use of foreign bank debt relative to domestic bank debt. It finds a positive association between the use of collateral by foreign banks and firm value, however finds no such corresponding association for the use of collateral by domestic banks. The results suggest that as an emerging market’s banking system matures and becomes more sophisticated, the differences between the information contained in local versus foreign bank lending diminishes; this diminishment erodes the differential impact on firm value of foreign versus local bank lending.

Original language	English (US)
Title of host publication	Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning (In 4 Volumes)
Publisher	World Scientific Publishing Co.
Pages	947-978
Number of pages	32
ISBN (Electronic)	9789811202391
ISBN (Print)	9789811202384
DOIs	https://doi.org/10.1142/9789811202391_0025
State	Published - Jan 1 2020

All Science Journal Classification (ASJC) codes

General Economics, Econometrics and Finance
General Business, Management and Accounting

Keywords

Emerging markets
Financial reform
Foreign bank debt
Foreign bank relationships

Access to Document

10.1142/9789811202391_0025

Cite this

@inbook{6401a274ba524c07a16f6e016224db94,

title = "Financial reforms and the differential impact of foreign versus domestic banking relationships on firm value",

abstract = "This study documents a substantial difference in impact on an emerging market firm{\textquoteright}s value due to its use of foreign bank debt relative to domestic bank debt. It finds a positive association between the use of collateral by foreign banks and firm value, however finds no such corresponding association for the use of collateral by domestic banks. The results suggest that as an emerging market{\textquoteright}s banking system matures and becomes more sophisticated, the differences between the information contained in local versus foreign bank lending diminishes; this diminishment erodes the differential impact on firm value of foreign versus local bank lending.",

keywords = "Emerging markets, Financial reform, Foreign bank debt, Foreign bank relationships",

author = "Yu, {Hai Chin} and Lee, {Cheng Few} and Sopranzetti, {Ben J.}",

note = "Publisher Copyright: {\textcopyright} 2021 by World Scientific Publishing Co. Pte. Ltd.",

year = "2020",

month = jan,

day = "1",

doi = "10.1142/9789811202391_0025",

language = "English (US)",

isbn = "9789811202384",

pages = "947--978",

booktitle = "Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning (In 4 Volumes)",

publisher = "World Scientific Publishing Co.",

address = "United States",

}

Financial reforms and the differential impact of foreign versus domestic banking relationships on firm value. / Yu, Hai Chin; Lee, Cheng Few ; Sopranzetti, Ben J.
Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning (In 4 Volumes). World Scientific Publishing Co., 2020. p. 947-978.

Research output: Chapter in Book/Report/Conference proceeding › Chapter

TY - CHAP

T1 - Financial reforms and the differential impact of foreign versus domestic banking relationships on firm value

AU - Yu, Hai Chin

AU - Lee, Cheng Few

AU - Sopranzetti, Ben J.

PY - 2020/1/1

Y1 - 2020/1/1

N2 - This study documents a substantial difference in impact on an emerging market firm’s value due to its use of foreign bank debt relative to domestic bank debt. It finds a positive association between the use of collateral by foreign banks and firm value, however finds no such corresponding association for the use of collateral by domestic banks. The results suggest that as an emerging market’s banking system matures and becomes more sophisticated, the differences between the information contained in local versus foreign bank lending diminishes; this diminishment erodes the differential impact on firm value of foreign versus local bank lending.

AB - This study documents a substantial difference in impact on an emerging market firm’s value due to its use of foreign bank debt relative to domestic bank debt. It finds a positive association between the use of collateral by foreign banks and firm value, however finds no such corresponding association for the use of collateral by domestic banks. The results suggest that as an emerging market’s banking system matures and becomes more sophisticated, the differences between the information contained in local versus foreign bank lending diminishes; this diminishment erodes the differential impact on firm value of foreign versus local bank lending.

KW - Emerging markets

KW - Financial reform

KW - Foreign bank debt

KW - Foreign bank relationships

UR - http://www.scopus.com/inward/record.url?scp=85096274326&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85096274326&partnerID=8YFLogxK

U2 - 10.1142/9789811202391_0025

DO - 10.1142/9789811202391_0025

M3 - Chapter

AN - SCOPUS:85096274326

SN - 9789811202384

SP - 947

EP - 978

BT - Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning (In 4 Volumes)

PB - World Scientific Publishing Co.

ER -

Financial reforms and the differential impact of foreign versus domestic banking relationships on firm value

Abstract

All Science Journal Classification (ASJC) codes

Keywords

Access to Document

Other files and links

Fingerprint

Cite this