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Does managerial ability affect bank loan pricing?

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  • Tang, Yajun
  • Wang, Li
  • Shu, Haicheng
  • Li, Tianci

Abstract

This research reveals that the competence of managers significantly shapes bank loan decisions, leading to favorable terms, including lower loan interest rates, for enterprises helmed by capable leaders. Mechanism tests illustrate that the impact of managerial capabilities on bank loan interest rates is achieved by mitigating corporate risk, enhancing the quality of corporate information, and mitigating agency conflicts. Further exploration indicates that the influence of managerial capabilities on reducing loan interest rates is more prominent in the context of private enterprises, those without industrial policy support, and businesses navigating environments characterized by heightened banking competition. This study contributes to the existing literature on the nexus between managerial capabilities and loan interest rates.

Suggested Citation

  • Tang, Yajun & Wang, Li & Shu, Haicheng & Li, Tianci, 2024. "Does managerial ability affect bank loan pricing?," Finance Research Letters, Elsevier, vol. 62(PB).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pb:s1544612324002058
    DOI: 10.1016/j.frl.2024.105175
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    References listed on IDEAS

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    Cited by:

    1. Xiao, Zumian & Niu, Yiran & Xiang, Lijin & Cui, Yingshuo, 2024. "Central bank digital currency and corporate debt financing costs: Empirical evidence from China," Finance Research Letters, Elsevier, vol. 69(PB).
    2. Tang, Kai, 2024. "The influence of managerial ability on corporate financialization," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 1229-1245.

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