Advanced Search
Journal search
Journal cover: Studies in Economics and Finance

Studies in Economics and Finance

ISSN: 1086-7376

Online from: 1977

Subject Area: Accounting and Finance

Content: Latest Issue | icon: RSS Latest Issue RSS | Previous Issues

Options: To add Favourites and Table of Contents Alerts please take a Emerald profile

Previous article.Icon: Print.Table of Contents.Icon: .

Lead bank quality and adverse rating announcements

Document Information:
Title:Lead bank quality and adverse rating announcements
Author(s):Wei-Huei Hsu, (School of Economics and Finance, Massey University, Wellington, New Zealand), Abdullah Mamun, (University of Saskatchewan, Saskatoon, Canada), Lawrence C. Rose, (College of Business, Massey University, Auckland, New Zealand)
Citation:Wei-Huei Hsu, Abdullah Mamun, Lawrence C. Rose, (2010) "Lead bank quality and adverse rating announcements", Studies in Economics and Finance, Vol. 27 Iss: 4, pp.340 - 357
Keywords:Banking, Banks, Credit rating, Quality
Article type:Research paper
DOI:10.1108/10867371011085165 (Permanent URL)
Publisher:Emerald Group Publishing Limited

Purpose – This paper seeks to examine whether the market values the monitoring activity undertaken by a quality bank in the presence of a credit rating agency. Specifically, the question is asked whether the quality of a lead lending bank influences a market reaction to adverse rating announcements concerning its borrowers.

Design/methodology/approach – The event study methodology and various bank quality proxies (size, growth rate in assets, profitability, capital ratio, bank's credit rating, and ownership) are used to examine the market reaction when a borrower's bank loan rating is placed with negative implication or is downgraded.

Findings – Firms which are certified and monitored by high-quality banks are less susceptible to negative market reactions when adverse rating announcements are made.

Originality/value – The findings indicate high-quality lending banks sustain investors' confidence in their borrowers in the face of deteriorating news. The paper argues that investors and borrowers value monitoring from a high-quality bank, which is an implication of a bank having access to private information about its borrowers.

Fulltext Options:



Existing customers: login
to access this document


- Forgot password?
- Athens/Institutional login



Downloadable; Printable; Owned
HTML, PDF (110kb)Purchase

To purchase this item please login or register.


- Forgot password?

Recommend to your librarian

Complete and print this form to request this document from your librarian

Marked list

Bookmark & share

Reprints & permissions