Is Social Capital Priced in Bank Loans?

2015 ◽  
Author(s):  
C.S. Agnes Cheng ◽  
Jing Wang ◽  
Ning Zhang ◽  
Sha Zhao
Keyword(s):  
Social Capital ◽  
Bank Loans

Bowling Alone, Bowling Together: Is Social Capital Priced in Bank Loans?

2017 ◽  
Vol 32 (4) ◽  
pp. 449-479 ◽  
Author(s):  
C. S. Agnes Cheng ◽  
Jing Wang ◽  
Ning Zhang ◽  
Sha Zhao
Keyword(s):  
Social Capital ◽  
New York ◽  
Terrorist Attack ◽  
The State ◽  
Bank Loans ◽  
Financing Costs ◽  
Societal Level ◽  
Capital Building ◽  
Loan Spreads ◽  
The Cost

We investigate whether the societal-level social capital enjoyed by firms affects the cost of their bank loans. Employing a measure of societal-level social capital for U.S. counties, we find that firms with higher societal-level social capital are associated with lower loan spreads. To further identify causality, we explore two events: Using a sample of firms that relocate their headquarters for tax reasons, we find that firms that move to lower (higher) social capital counties experience a higher (lower) cost of bank loans following relocations. The second event was the terrorist attack on September 11, 2001. After the disaster, social capital in affected counties—mainly in the State of New York, the State of Virginia, and adjacent counties—increased through social capital building efforts. We show that firms headquartered in the affected counties experience significantly lower loan spreads than other firms after the attack. Our findings contribute to the understanding of how societal-level social capital promotes economic development through its impact on financing costs.

scholarly journals Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds

2017 ◽  
Vol 52 (3) ◽  
pp. 1017-1047 ◽  
Author(s):  
Iftekhar Hasan ◽  
Chun Keung Hoi ◽  
Qiang Wu ◽  
Hao Zhang
Keyword(s):  
Social Capital ◽  
Causal Relation ◽  
Tax Avoidance ◽  
Bank Loans ◽  
Bank Loan ◽  
Debt Contracting ◽  
Loan Terms ◽  
Loan Spreads ◽  
Bond Spreads ◽  
Public Bonds

We find that firms headquartered in U.S. counties with higher levels of social capital incur lower bank loan spreads. This finding is robust to using organ donation as an alternative social capital measure and incremental to the effects of religiosity, corporate social responsibility, and tax avoidance. We identify the causal relation using companies with a social-capital-changing headquarters relocation. We also find that high-social-capital firms face loosened nonprice loan terms, incur lower at-issue bond spreads, and prefer public bonds over bank loans. We conclude that debt holders perceive social capital as providing environmental pressure that constrains opportunistic firm behaviors in debt contracting.

scholarly journals Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds

2015 ◽  
Author(s):  
Iftekhar Hasan ◽  
Chun Keung (Stan) Hoi ◽  
Qiang Wu ◽  
Hao Zhang
Keyword(s):  
Social Capital ◽  
Bank Loans ◽  
Debt Contracting ◽  
Public Bonds

scholarly journals Social Capital and Cost of Bank Loans During the Financial Crisis

2021 ◽  
Vol 25 (2) ◽  
pp. 107
Author(s):  
Abdelmajid Hmaittane ◽  
Mohamed Mnasri ◽  
Kais Bouslah ◽  
Bouchra M’Zali
Keyword(s):  
Social Capital ◽  
Financial Crisis ◽  
Bank Loans
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