How law and institutions shape financial contracts
Subtitle: the case of bank loans
By: Jun Qian, Philip E. Strahan.
Contributors: Strahan, Philip E. 1963-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11052; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11052.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Bank loans -- Mathematical models.; Banking law -- Mathematical models.; Finance -- Law and legislation -- Mathematical models.
Description: "We examine empirically how legal origin, creditor rights, property rights, legal formalism, and financial development affect the design of price and non-price terms of bank loans in almost 60 countries.  Our results support the law and finance view that private contracts reflect differences in legal protection of creditors and the enforcement of contracts.  Loans made to borrowers in countries where creditors can seize collateral in case of default are more likely to be secured, have longer maturity, and have lower interest rates.  We also find evidence, however, that "Coasian" bargaining can partially offset weak legal or institutional arrangements.  For example, lenders mitigate risks associated with weak property rights and government corruption by securing loans with collateral and shortening maturity.  Our results also suggest that the choice of loan ownership structure affects loan contract terms"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 2/7/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.