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| Author: | Cook, D.O. Schellhorn, C.D. Spellman, L.J. |
| Title: | Lender certification premiums |
| Journal: | Journal of Banking and Finance
2003 : AUG, VOL. 27:8, p. 1561-1579 |
| Index terms: | Banking Loans Pricing |
| Freeterms: | Lending |
| Language: | eng |
| Abstract: | The announcement of a bank loan by a borrowing firm has been shown to have a positive effect on the market value of the borrower's claims. This is consistent with a lender's implied endorsement of the borrower an endorsement with value to the borrower. This paper investigates whether the lender is able to extract a premium loan rate or certification premium in return. Empirical evidence is found that in the absence of collateral reputable lenders are able to exact a certification premium. |
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