Large debt financing: syndicated loans versus corporate bonds

Following the introduction of the euro, the markets for large debt financing experienced a historical expansion. We investigate the financial factors behind the issuance of syndicated loans for an extensive sample of euro area non-financial corporations. For the first time we compare these factors to those of its major competitor: the corporate bond market. We find that large firms, with greater financial leverage, more (verifiable) profits and higher liquidation values tend to prefer syndicated loans. In contrast, firms with larger levels of short-term debt and those perceived by markets as having more growth opportunities favour financing through corporate bonds. JEL Classification: D40, F30, G21corporate bonds, debt choice, syndicated loans, the euro

Securitization and lending standards: evidence from the wholesale loan market

We investigate the effect of securitization activity on banks’ lending standards using evidence from pricing behavior on the syndicated loan market. We find that banks more active at originating asset-backed securities are also more aggressive on their loan pricing practices. This suggests that securitization activity lead to laxer credit standards. Macroeconomic factors also play a large role explaining the impact of securitization activity on bank lending standards: banks more active in the securitization markets loosened more aggressively their lending standards in the run up to the recent financial crisis but also tightened more strongly during the crisis period. As a continuum of this paper we are examining whether individual loans that are eventually securitized are priced more aggressively by using unique European data on individual loans from all major trustees. JEL Classification: G21, G28bank risk taking, financial crisis, securitization, syndicated loans

The effect of perforations on the stress wave propagation characteristics of multilayered materials

The effect of perforated interlayers on the stress wave transmission of multilayered materials was investigated both experimentally and numerically using the Split Hopkinson pressure bar (SHPB) testing. The multilayer combinations consisted of a ceramic face plate and a glass/epoxy backing plate with a laterally constrained low modulus solid or perforated rubber and Teflon interlayer. The perforations on rubber interlayer delayed the stress rise time and reduced the magnitude of the transmitted stress wave at low strains, while the perforations allowed the passage of relatively high transmitted stresses at large strains similar to the solid rubber interlayer. It was concluded that the effect of perforations were somewhat less pronounced in Teflon interlayer configuration, arising from its relatively low Poisson's ratio. It was finally shown that SHPB testing accompanied with the numerical simulations can be used to analyze the effect of compliant interlayer insertion in the multilayered structures. © The Author(s) 2015

Corporate governance and corporate ownership: The investment behaviour of Japanese institutional investor

In this paper, we investigate the investment behaviour of institutional investors in terms of their shareholdings in 2,938 companies listed on the Tokyo and Osaka Stock Exchanges at the end of June 2002. By doing so, we provide one of the first detailed empirical analyses of the involvement of institutional investors in the ownership structure of Japanese listed firms. At the same time, we compare this aspect of Japanese corporate governance with the shareholdings of banks in the same group of firms. Our results show that the equity investments of financial investors – institutional investors and banks – in Japanese listed companies at the end of June 2002 were predominantly in the high-tech manufacturing, traditional manufacturing and communications industries. All financial investors combined held more than 60% of the equity capital of the firms listed on the Tokyo and Osaka Stock Exchanges, with banks being the largest group of these financial investors. Further analysis shows that on average most financial investors were minority shareholders, holding up to 3% of a firm’s total shares. Domestic financial investors tended to have higher levels of ownership than foreign institutions, and small and minority shareholdings were more common among foreign financial investors than among domestic banks and institutional investors. Finally, the average shareholdings of six large Japanese financial groups in Japanese listed companies were considerable, representing an average ownership level of 3.3% of a firm’s stock. However, they were not as high as to exert a significant degree of corporate control. All in all, we conclude that as of end-June 2002, banks continued to be important shareholders of Japanese listed firms, owing around 34% of the market capitalisation of all listed firms on the Tokyo and Osaka Stock Exchanges. At the same time, institutional investors, predominantly investment firms and insurance companies, were important shareholders as well, accounting for around 27% of total market capitalisation. Moreover, we found that foreign investment funds were very important shareholders of Japanese listed firms, which confirms the general perception that foreign ownership of Japan’s corporate sector has become a rather crucial characteristic of the system of corporate governance in Japa

Bank reputation and securitization quality:European evidence

We examine the link between issuer bank reputation and the performance of mortgage-backed securities (MBS) in the European market. We find that MBS sold by reputable issuer banks are collateralised by higher quality asset pools with lower delinquency rates and are less likely to be downgraded. However, during boom periods – characterized by declining credit standards, MBS originated by reputable issuer banks tend to be collateralised by lower quality assets, compared to normal periods

Securitisation and banking risks: what do we know so far?

Purpose – Bank securitisation is deemed to have been a major contributing factor to the 2007/2008 financial crises via fuelling credit growth accompanied by lower banks’ credit standards. Yet, prior to the crisis a common view was that securitisation activity makes the financial system more stable as risk was more easily diversified, managed and allocated economy-wide. The purpose of this paper is to review the extant literature to explore the so far generated knowledge on the impact of securitisation on banking risks. In particular, the authors examine the theoretical arguments and empirical studies on securitisation and banking risks before and after the global financial crisis of 2007/2008. Design/methodology/approach – Review and discussion of the literature. Findings – Theoretical literature univocally accentuate the undesirable consequences of securitisation, which may promote retention of riskier loans, undermine banks’ screening and monitoring incentives and enhance banks’ risk appetite. However, empirical evidence does not uniformly support the theoretical conclusions. If banks are securitisation active they lend more to risky borrowers, have less diversified portfolios and hold less capital, retain riskier loans and are aggressive in loan pricing. Others argue that securitisation reduces banks insolvency risk, increases profitability, provides liquidity and leads to greater supply of loans. Mortgage securitisation is an area where there is consistent evidence of bank risk taking via securitisation. Originality/value – The paper identifies open issues for future research

Cutaneous Anthrax Outbreak in the Trakya Region of Turkey

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Determinants of syndicated lending in European banks and the impact of the financial crisis

Syndicated lending is a widely practiced alternative to traditional bilateral lending and within Europe the syndicated loan market increased significantly during the 2000s. Using a dataset consisting of 4,166 European banks, the authors examine the factors that determine the bank’s willingness to use syndicated lending rather than traditional lending during the period 2000 to 2010. The paper finds that syndicated lending was an alternative to bilateral loans when banks were targeting growth or looking to utilise potential capital surpluses. Syndicated lending was also used to improve the returns and credit quality of the bank’s loan portfolios. However, in the post crisis period, European banks are less interested in syndicated loan markets and larger banks, especially, those with strong capital bases, are refraining from syndicated lending

Do credit markets have faith in IMF imprimatur?

This paper examines the effect of the IMF imprimatur on the cost of borrowing in the international capital markets by investigating over 2600 loan contracts issued to public and private sector borrowers located in countries experiencing balance of payments problems between 1993 and 2001. The data are grouped into two samples. Both the samples comprise countries characterised by similar balance of payments problems, but only one of them comprise countries that have availed of IMF assistance. The IMF assisted countries paid more for short term loans and had obtained fewer long term loans compared to their non-IMF peers for the financing of similar purpose projects