Analysis of factors that are affecting corporate loan rates
Date Issued
2014
Date
2014
Author(s)
Hsu, Chun-Tang
Abstract
Banks play the role of mediator between fund suppliers and demanders. If a bank operates healthy and efficiently, it will not only promote capital formation and improve capital efficiency, but also stabilize a country''s financial system, thus assisting economic developments. From a corporate finance perspective, resources can be divided into internal and external funding. Internal funding includes retained earnings of a company, meaning the funding of enterprise itself. External funding often means corporate capital through issuing equity securities, but not every enterprise is allowed to engage in such behavior of issuing securities. Therefore, loans financing from financial institutions is the most common way companies receiving funding. However, loaning funds from banks, such as the purchase of goods in the commodity market, principal and interest must be paid on a regular basis. Hence, this study is to understand that in the lending from banks to businesses, the degree which the factors that are affecting the rates which banks give for businesses lenders.
The empirical results indicated that from the management and operation perspective, when a company is a listed company, has longer period of operation, and is a family-run business, together resulting in companies having lower interest rates on loans. If viewing from corporate governance and ownership structure of the company, the larger of the board of directors, directors'' shareholding ratio, managers’ shareholding ratio, the ratio of the largest shareholder, and higher institutional ownership ratios are negatively correlated with interest rates. Moreover, the corporate financial ratios, the size of the assets, return on assets, quick ratio, and large current ratio all are negative correlated with interest rates. Conversely, high debt ratio has significantly positive correlation. On the operating conditions of lending banks, if it has high NPL ratio, high capital adequacy ratio and high return on equity, lending rates for a company increase significantly. On the contrary, if collecting interests is not the main source of income due to a bank’s diversification, companies can usually borrow with more generous rates from banks.
From the perspective of corporate credit rating analysis, the higher corporate credit rating greatly reduced the risk of default of the borrower, thus making the company obtaining loans at a lower interest rate. Finally, from the perspective of the content of loan contract between corporate and bank, if the banks require collateral loan with a firm , meaning the default rates will increase significantly, so the bank will also require a higher risk premium from its borrowers. In addition, corporate loan amount and interest rate showed a significant positive correlation.
Subjects
家族企業；公司治理；股權結構；銀行所有權類型；信用風險；擔保品；資本適足率
Type
thesis
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ntu-103-R01724053-1.pdf
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