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Time for a change: loan conditions and bank behavior when firms switch banks

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Time for a change : loan conditions and bank behavior when firms switch banks. / Ioannidou, Vasso; Ongena, Steven.

In: Journal of Finance, Vol. 65, No. 5, 2010, p. 1847–1877.

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Ioannidou, Vasso ; Ongena, Steven. / Time for a change : loan conditions and bank behavior when firms switch banks. In: Journal of Finance. 2010 ; Vol. 65, No. 5. pp. 1847–1877.

Bibtex

@article{67748dd16b114f6f9e92c7a4e4464962,
title = "Time for a change: loan conditions and bank behavior when firms switch banks",
abstract = "This paper studies loan conditions when firms switch banks. Recent theoretical work on bank–firm relationships motivates our matching models. The dynamic cycle of the loan rate that we uncover is as follows: a loan granted by a new (outside) bank carries a loan rate that is significantly lower than the rates on comparable new loans from the firm's current (inside) banks. The new bank initially decreases the loan rate further but eventually ratchets it up sharply. Other loan conditions follow a similar economically relevant pattern. This bank strategy is consistent with the existence of hold-up costs in bank–firm relationships.",
author = "Vasso Ioannidou and Steven Ongena",
year = "2010",
doi = "10.1111/j.1540-6261.2010.01596.x",
language = "English",
volume = "65",
pages = "1847–1877",
journal = "Journal of Finance",
issn = "0022-1082",
publisher = "Wiley-Blackwell",
number = "5",

}

RIS

TY - JOUR

T1 - Time for a change

T2 - loan conditions and bank behavior when firms switch banks

AU - Ioannidou, Vasso

AU - Ongena, Steven

PY - 2010

Y1 - 2010

N2 - This paper studies loan conditions when firms switch banks. Recent theoretical work on bank–firm relationships motivates our matching models. The dynamic cycle of the loan rate that we uncover is as follows: a loan granted by a new (outside) bank carries a loan rate that is significantly lower than the rates on comparable new loans from the firm's current (inside) banks. The new bank initially decreases the loan rate further but eventually ratchets it up sharply. Other loan conditions follow a similar economically relevant pattern. This bank strategy is consistent with the existence of hold-up costs in bank–firm relationships.

AB - This paper studies loan conditions when firms switch banks. Recent theoretical work on bank–firm relationships motivates our matching models. The dynamic cycle of the loan rate that we uncover is as follows: a loan granted by a new (outside) bank carries a loan rate that is significantly lower than the rates on comparable new loans from the firm's current (inside) banks. The new bank initially decreases the loan rate further but eventually ratchets it up sharply. Other loan conditions follow a similar economically relevant pattern. This bank strategy is consistent with the existence of hold-up costs in bank–firm relationships.

U2 - 10.1111/j.1540-6261.2010.01596.x

DO - 10.1111/j.1540-6261.2010.01596.x

M3 - Journal article

VL - 65

SP - 1847

EP - 1877

JO - Journal of Finance

JF - Journal of Finance

SN - 0022-1082

IS - 5

ER -