IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v20y2013i13p1233-1237.html
   My bibliography  Save this article

Is unsystematic risk priced in bank loan contracts?

Author

Listed:
  • Margot Quijano

Abstract

We demonstrate that a firm's unsystematic risk is positively related to its cost of bank debt. A borrower's unsystematic risk needs to be costly monitored by the lender and some of this cost is included in the bank contract. A one SD increase in unsystematic risk results in a 14.0--19.5% increase in the cost of the loan, or 24--34 basis points for the median loan. Our results complement recent literature about the relevance of unsystematic risk and its effect on the cost of capital of corporations.

Suggested Citation

  • Margot Quijano, 2013. "Is unsystematic risk priced in bank loan contracts?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(13), pages 1233-1237, September.
    • Handle: RePEc:taf:apeclt:v:20:y:2013:i:13:p:1233-1237
    DOI: 10.1080/13504851.2013.799750
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13504851.2013.799750
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2013.799750?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Monika Bolek, 2014. "Return On Current Assets, Working Capital And Required Rate Of Return On Equity," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 10(2), pages 1-10, August.
    2. Fabio Pizzutilo, 2017. "Measuring the under-diversification of socially responsible investments," Applied Economics Letters, Taylor & Francis Journals, vol. 24(14), pages 1005-1018, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:20:y:2013:i:13:p:1233-1237. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.