The Impact of Information Asymmetry, Moral Hazard and the Structure of Funding on Corporate U.S. Dollars Loan Pricing: The Empirical Study in Indonesia the Period 1990-1997

This study aims to answer the question: "What factors that influence the price of corporate loans in Indonesia?" And "Are there some differences in loan pricing between several types of creditors?". Furthermore, this research is to develop and test the loan pricing model that was developed in America and Europe to the context or setting in Asia, especially Indonesia. Different conditions and settings of the financial system between America/Europe and Asia, especially Indonesia, causing the loan pricing model that was developed in America/Europe can not be fully implemented for Indonesia. Key issues in this study consisted of: information asymmetry, moral hazard and funding structure. The first issue, information asymmetry consists of the type of creditors, foreign and domestic ownership, public and non-public ownership. The second issue, moral hazard problem consists of variables governmental and non-government ownership, and the special relationship between creditors and debtors. The last issue, creditors’ structure of funding is proxied by the ratio of CD / ML. In addition, this study also adobt the loan pricing models that are developed in America / Europe as control variables. This study also examines the argument of Strahan (1999) whether the loan fees also reflected the condition of the loan as well as loan spreads. The OLS regression (Ordinary Least Squares) with white correction method (White heteroskedasticity correction) for heteroscedasticity problem is conducted to test the model. Various samples and sub samples are prepared to answer various research questions and hypotheses. Testing between regression coefficients are conducted to examine differences in loan pricing between different types of creditors for each variable in the model. The test results generally show that only two new variables suggested by the study, namely: ownership and structure of funding have a significant contribution to the loan pricing model. For variable type of institution consisting of investment banks and commercial banks indicate that generally there is no difference in loan pricing between the two, only in some models of these variables are not significant with signs consistent.Ownership variable show results consistent with the hypothesis and significant effect on loan prices. While the variable special relationship between creditors and debtors have no effect on loan prices, it is due to inter-group loans made by conglomerates. For the case of capital costs of the creditor shows that the variable has a positive effect on lending rates set by creditors. Testing different regression coefficients lead to the conclusion that domestic creditors succeeded in detecting an increased risk of the debtor before the economic crisis of 1997 compared with foreign creditors.

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Inter-Firm Connections, Alliance Formation and the Value Created by Alliances

Quarterly Journal of Finance ◽

10.1142/s2010139220500196 ◽

2020 ◽

Vol 10 (04) ◽

pp. 2050019

Author(s):

Yun Liu ◽

Tomas Mantecon ◽

Sabatino Dino Silveri ◽

Wei Sun

Keyword(s):

Moral Hazard ◽

Information Asymmetry ◽

Social Connections ◽

Opportunistic Behavior ◽

Alliance Formation ◽

Board Interlocks ◽

Valuation Effect ◽

Ex Post ◽

The Impact ◽

Flow Of Information

We investigate the impact of inter-firm connections on alliances. We find that both professional connections and social connections, borne out of board interlocks, employment ties and educational ties, increase the likelihood of alliance formation. In addition, the market reacts more favorably to alliance announcements in the presence of such connections, and this positive valuation effect increases with the degree of information asymmetry between the partner firms. Our findings are consistent with inter-firm connections creating value because they facilitate the flow of information between partner firms, thereby reducing moral hazard concerns and the risk of ex-post opportunistic behavior.

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Moral Hazard Assessment in State-subsidized: Renewable Energy Investments

Periodica Polytechnica Social and Management Sciences ◽

10.3311/ppso.12360 ◽

2019 ◽

Vol 27 (1) ◽

pp. 37-47

Author(s):

Olivér Hortay

Keyword(s):

Renewable Energy ◽

Theoretical Model ◽

Moral Hazard ◽

Information Asymmetry ◽

Hazard Assessment ◽

Incentive Structure ◽

Ceteris Paribus ◽

Market Prices ◽

The Impact ◽

Great Protection

This paper presents the impact of state subsidy programs on moral hazard in renewable energy investments. The purpose of the research is to build a theoretical model which is able to handle the borrower’s behavior under asymmetric information circumstances, thus creating a new aspect in the debate about the choice of the financially ideal incentive structure. The general conclusion of the article is that technology based subsidy mechanisms which provide great protection to the investing companies (ceteris paribus), increase information asymmetry and agency costs. While these systems improve predictability of revenues, they block effective lending or otherwise, the market dependent subsidies moderate the moral hazard, which reduce the risk of fluctuating market prices.

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How Agency-Theoretic Factors Affect the Delegation of Pricing Authority to the Sales Force: An Empirical Study

International Journal of Marketing Studies ◽

10.5539/ijms.v3n1p66 ◽

2011 ◽

Vol 3 (1) ◽

pp. 66

Author(s):

Alireza Fazlzadeh ◽

Pegah Mohammadi ◽

Abolfazl Sepehrfar

Keyword(s):

Firm Performance ◽

Empirical Study ◽

Information Asymmetry ◽

Sales Force ◽

Sales Managers ◽

Related Information ◽

Customer Heterogeneity ◽

Result Show ◽

The Impact ◽

Positive Effect

Here we (1) empirically test a framework of important drivers of price delegation based on agency-theoretic (2) investigate the impact of price delegation on firm performance. The study data's collected from a sample of 180 companies from the industrial home appliances and structural equipment industry in Iran. Result show that, risk-aversion of salespeople is negatively and customer heterogeneity positively related to the degree of price delegation. Also we find that information asymmetry has no relationship with price delegation. Furthermore, we find a positive effect of price delegation on firm performance, which is amplified when market-related uncertainty is high and when salespeople possess better customer-related information than their managers. Hence, our results clearly show that rigid, “one price fits all” policies are inappropriate in many B2B market situations. sales managers should grant their salespeople sufficient leeway to adapt prices to changing customer requirements.

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Information asymmetry on the market of non-banking financial services in Ukraine: causes, consequences, methods of control

Public and Municipal Finance ◽

10.21511/pmf.05(1).2016.04 ◽

2016 ◽

Vol 5 (1) ◽

pp. 29-37 ◽

Cited By ~ 1

Author(s):

Valentyna Levchenko ◽

Myroslav Ostapenko

Keyword(s):

Moral Hazard ◽

Information Asymmetry ◽

Adverse Selection ◽

Financial Services ◽

Opportunistic Behavior ◽

Information Asymmetries ◽

Key Participants ◽

The Impact ◽

Methods Of Control

The article examines the features of the impact of information asymmetry on the key participants of the market of non-banking financial services in Ukraine. It defines the basic reasons of its existence on the market. The analysis of the consequences of information asymmetry for the functioning of non-banking financial services in Ukraine shows that it creates the conditions for opportunistic behavior and leads to adverse selection and moral hazard on the market. Based on the research of existing methods and approaches to the reduction of information asymmetries the paper offers recommendations to overcome this problem on the market of non-banking financial services in Ukraine

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