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SUMMARY:Is Borrowing from Banks More Expensive than Borrowing from the Mar
 ket?
DTSTART:20180302T103000
DTEND:20180302T120000
DTSTAMP:20260510T084045Z
UID:8d9b4c3dc1bd5cc9169d61d60c958196fbe3a16d45d4627b5aecf8f1
CATEGORIES:Conferences - Seminars
DESCRIPTION:Michael SCHWERT (Ohio State University)\nThis paper investigat
 es the pricing of bank loans in a dataset of new loans to firms with outst
 anding bonds. After accounting for seniority\, banks earn an economically 
 large interest rate premium relative to the price of credit risk in the bo
 nd market. To quantify the bank premium\, I apply a structural model that 
 incorporates debt priority and prices corporate bonds accurately. The mode
 l matches expected loan recoveries conditional on default\, but estimates 
 loan spreads that are 240 basis points smaller\, or 84% lower\, than obser
 ved in the data. Separate analysis of secured bonds shows that seniority i
 s priced  appropriately in the bond market\, which suggests that the loan
  premium is special to banks. The revealed preference of rms implies that 
 they place a high value on bank services other than the simple provision o
 f debt capital.
LOCATION:UNIL\, Extranef\, room 126 https://planete.unil.ch/plan/?local=EX
 T-126
STATUS:CONFIRMED
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