Financial Default Risk on Counterparty

• Main Authors: Pei-Ling Tsai, 蔡佩凌
• Other Authors: Shu-Ling Yang
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/eeyr5x

碩士 === 國立臺中科技大學 === 流通管理系碩士班 === 100 === This study examines the impacts on wealth effect of trade and financial counterparties from different financial distress extents firms. Our findings indicate that there are significant contagion effects from the subsamples with heavily financial distress to their counterparties, especially for trade debtors but slightly and temporarily for financial institutional creditors. It is seemingly due to the idiosyncratic of financial institutions. Besides, the risk exposure of trade creditor is a positive and important source of contagion effect and the contagion effect on creditors can be alleviated by improving in solvency ability of distress firms. However, the contagion effect on trade debtors is exacerbated by increasing the dependence on distress firms. This study suggests that trade counterparty is a more important additional channel of credit contagion than financial counterparty. These results have significant implications for the formulation of credit policy for firms and the construct portfolios for investors.