Bank Loans and Maturity of Corporate Bond Issues

Hyungsang Song, Bum J. Kim

Journal of Derivatives and Quantitative Studies: 선물연구

ISSN: 1229-988X

Open Access. Article publication date: 31 May 2016

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Abstract

This paper studies the impact of bank monitoring on the maturity structure of corporate debt issues using Korean firms listed on Korea Exchange from 2005 to 2011. We show that a higher proportion of bank debt in the small and medium enterprises results in corporate debt of longer maturity. The close relationship between banks and SMEs creates information and alleviates information asymmetry problem of borrowing firms. However, banks less perform monitoring and screening as information creator in the relationship with big firms. Because big firms have information asymmetry less than SMEs, and they suffer less problems from information asymmetry when contracting debt. The Probit regression shows that the Bank-Firm relationship increases possibility of issuing corporate debt of longer maturity in SMEs, and it supports the results of regressions above.

Keywords

Citation

Song, H. and Kim, B.J. (2016), "Bank Loans and Maturity of Corporate Bond Issues", Journal of Derivatives and Quantitative Studies: 선물연구, Vol. 24 No. 2, pp. 221-244. https://doi.org/10.1108/JDQS-02-2016-B0002

Publisher

:

Emerald Publishing Limited

Copyright © 2016 Emerald Publishing Limited

License

This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode


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