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The Effects of Announcements of Bank Lending Agreements on the Market Values of U.S. Banks

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  • Amjad Waheed
  • Ike Mathur

Abstract

Banks, by their very nature, specialize in evaluating risky lending situations, and their decisions to grant loans are signals to other providers of capital about the borrowers' financial strength. These other providers can evaluate these signals and can lower their own information generation costs about the borrowers by performing less costly evaluations. They can then provide their services at lower costs. Corporate and other borrowers, by signaling their credit-worthiness through bank borrowing, can lower their credit costs. Surprisingly, there is little evidence to indicate the effects of bank lending agreements on the market values of U.S. bank-holding companies (USBHCs).

Suggested Citation

  • Amjad Waheed & Ike Mathur, 1993. "The Effects of Announcements of Bank Lending Agreements on the Market Values of U.S. Banks," Financial Management, Financial Management Association, vol. 22(1), Spring.
    • Handle: RePEc:fma:fmanag:waheed93
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    Cited by:

    1. Niu, Jijun, 2016. "Loan growth and bank valuations," The Quarterly Review of Economics and Finance, Elsevier, vol. 61(C), pages 185-191.
    2. Waheed, Amjad & Mathur, Ike, 1995. "Wealth effects of foreign expansion by U.S. banks," Journal of Banking & Finance, Elsevier, vol. 19(5), pages 823-842, August.
    3. E. James Cowan & Karen C. Denning & Anne Anderson & Xiaohui Yang, 2018. "Divergent Market Responses to Human Capital Reorganizations," Business and Economic Research, Macrothink Institute, vol. 8(1), pages 212-243, March.
    4. Li, Chunshuo & Ongena, Steven, 2015. "Bank loan announcements and borrower stock returns before and during the recent financial crisis," Journal of Financial Stability, Elsevier, vol. 21(C), pages 1-12.

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