A Study of Bank Over-Lending and Its Determinants

• Main Authors: Yong Wang Chen, 陳永旺
• Other Authors: Yong Chin Liu
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/09850629075863029714

碩士 === 亞洲大學 === 經營管理學系碩士班 === 97 === Under information asymmetry, firms are bounded to keep a good banking relationship and show success dimensions insofar as they can to get more margin lending, lower borrowing rate of interest and other preferential conditions of credit. Also, firms choose to express no messages harmful to themselves which easily makes the bank give an inappropriate credit line to them. If the bank can’t lend completely the money which firms apply for, that is, there is an insufficient lending, firms have to seek other ways to get access to margin lending for meeting their fund demands, so firms won’t face any impacts on their general operation and growth. On the contrary, if the banks lend excessively firms the money, it’s likely to be an over-lending and lead to a high risk of bankruptcy of firms, and the bank also load high default risks. From a viewpoint of individual firm, this research examines if the total amounts of short-term borrowings from all financial institutions are in excess of their fund demands for firms with stocks publicly traded in the Taiwan Securities Exchange and OTC markets from 1993 to 2007. About research methods, this paper compares practical short-term borrows with working capital (turnover funds) limits (lines) to make a judgment if the firm has an over-borrowing (so called over-lending of financial institutions). Combining pooling cross-sectional and time-series data of all sample firms to perform a logistic regression, so that which variables are capable of judging over-lending of banks. The findings are as follows. There is a slightly relation between over-lending and financial crisis of firms. The financial institutions tend to have a over-lending easily for firms with inferior profitabilities, high debt ratios, poor grade of credits, high growth rates, large scale, more interactive banks, high ratios of borrowing from financial institutions and secured loans. The bank will possibly have an over-lending when both the market of lending becomes competitive and the economy conditions boom, but the significance is unstable statistically.