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Credit risk, owner liability, and bank loan maturities during the global financial crisis

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  • Fábio Dias Duarte
  • Ana Paula Matias Gama
  • Mohamed Azzim Gulamhussen

Abstract

We relate credit risk and owners’ personal guarantees to bank loan maturities during the global financial crisis. The findings, which remain robust to reverse causality, show that firms rated as low risk, with a strong relationship with the bank, whose owners provided personal guarantees and with large loan sizes obtained longer maturities. Banks with larger nonperforming loans provided loans with shorter maturities. Firms with low‐ and high‐risk ratings that provided owners’ personal guarantees obtained longer maturities. These findings shed additional light on the relationship between risk and loan maturities and the role of personal guarantees in reducing information asymmetries.

Suggested Citation

  • Fábio Dias Duarte & Ana Paula Matias Gama & Mohamed Azzim Gulamhussen, 2020. "Credit risk, owner liability, and bank loan maturities during the global financial crisis," European Financial Management, European Financial Management Association, vol. 26(3), pages 628-683, June.
    • Handle: RePEc:bla:eufman:v:26:y:2020:i:3:p:628-683
    DOI: 10.1111/eufm.12239
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