Research Summary
Research Summary
Does Banks' Corporate Control Benefit Firms?
Description
In this paper we examine the importance of banks' corporate control by investigating the loan policy pricing effect of banks' voting stakes on their borrowers. A sample of loans taken out over the 2000-2003 time period shows that banks charge lower rates on loans and impose fewer restrictive convenants to firms in which they have a voting stake, and that the interest rate discount increases with the bank's voting stake.