The Impact of Corporate Governance,Operational Performance and External Credit Rating on the Credit Terims of Bank Syndicated Loans

• Main Authors: Chun-mei Hsin, 辛春美
• Other Authors: Jen-ten Liu
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/20027277886687312131

碩士 === 國立臺北商業技術學院 === 商學研究所 === 98 === This study explores the impact of corporate governance, operational performance as well as external credit rating on financial institutions' decision on the terms of syndicated loans. In the domestic financial market, syndicated loans have become a good avenue for banks to deploy their cash with reasonable returns and controllable credit risk. Since almost every syndicated loan carries the characteristics of relatively large amount with unique complex terms and long duration, the banks normally set up their own syndicated loan departments to manage the credit risk, perform Credit Act compliance as well as avoid oversight. While striving to engage as many decent placements as possible, the syndicated loan departments of different banks normally collaborates with one another to jointly scrutinize, evaluate and set the terms and conditions of the loans to enterprises. Since there is scarcity of articles on syndicated loans, this research carries a function to fill the void. This research covers all (74) of the syndicated loans granted by a listed commercial bank between 2004-2008 to its non-financial public company clients in Taiwan. Regression analyses were conducted to investigate the impact of corporate governance, operational performance as well as external credit rating of the clients on the loan amount, duration, interest rate, number of participating syndicating banks, and guarantor as well as collateral requirements. In terms of corporate governance, the analysis shows that the larger the size of the board, the higher amount of syndicated loan is granted with longer duration and larger number of participating banks. In addition, the fact that longer duration loans are granted to clients with higher percentage of board member shareholdings suggests that banks consider this factor an indication of long-term management ,mindset and better governance of the clients. Regarding the role operational performance plays on the credit terms, it is identified that the higher the cash flow ratio, the more leverage the borrower has to negotiate a larger loan amount with fewer guarantors. Plus, more banks are willing to participate in this kind of syndication. The analysis shows that operational performance is inversely correlated with interest rate and number of guarantors required. Lastly, the better the credit rating of the borrowing enterprise, loans of lower interest rate with less collateral. The findings in this study can serve as a reference to the governing agencies, financial institutions, enterprises and legislators.