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on Corporate Finance |
| By: | Ahmet Deryol |
| Abstract: | Firms may prefer to delay some loan payments while continuing to service others because of lender and loan characteristics. I explore the impact of bank-level and bank–firm-level indicators on the strategic delay behaviors of nonfinancial corporations. Three factors play a key role in their strategic delay decisions. First, strategic delay events occur more when the likelihood of obtaining additional and high-quality funding in the future is limited. Second, firms are more reluctant to delay payments of loans strategically that are easier to repay. Third, firms are more likely to delay payments when the anticipated cost of delaying is low. Importantly, as the financial literacy levels of firm owners increase, the likelihood of a strategic delay event decreases. |
| Keywords: | Strategic delay, Firm behavior, Credit risk |
| JEL: | G21 G32 G33 G53 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2608 |
| By: | Grakolet Gourene; Jiri Balcar; Lenka J. Filipova; Zuzana B. Schwidrowski |
| JEL: | D22 G21 G32 |
| Date: | 2024–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:rza:ersawp:896 |
| By: | Andrea Bellucci (University of Insubria); Alberto Citterio (University of Insubria); Kambar Farooq (University of Insubria); Rossella Locatelli (University of Insubria); Andrea Uselli (University of Insubria) |
| Abstract: | This paper investigates the causal effect of ESG rating initiation on corporate borrowing costs. Using a staggered difference-in-differences design, we analyze a panel of Italian publicly listed non-financial firms from 2013 to 2023. We find that becoming ESG-rated leads to a statistically and economically significant reduction in the firm's cost of debt. On average, the cost of debt declines by approximately 90 basis points following ESG rating initiation. This effect strengthens over time indicating that the benefits of ESG certification in debt markets accumulate as lenders incorporate the ESG information. These findings hold up under a range of robustness tests including various matching strategies, alternative difference-indifferences estimators, placebo tests, and the use of different control groups. Moreover, this relation is stronger for firms that are financially constrained, highly levered, and capital-intensive, as well as firms operating in low carbon industries. Overall, our results offer causal evidence that getting ESG-rated lead to lower cost of debt. |
| Keywords: | Environmental, Social, and Governance (ESG) ratings; Cost of debt; Corporate borrowing costs; Sustainable finance |
| JEL: | G32 G14 M14 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:anc:wmofir:197 |
| By: | Muli, Anthony; Ndwiga, David; Agung, Raphael; Njoroge, Samantha |
| Abstract: | The study seeks to examine the effects of credit guarantee schemes on Micro, Small and Medium-sized Enterprises (MSME) lending. Specifically, the paper examined the performance of a specified credit guarantee scheme, effect of the credit guarantee scheme on MSME loan default probability and how loan repayment performs across different sectors. The study utilised bank level data for 2, 398 MSMEs under the specified credit guarantee scheme. The study found that the credit guarantee scheme improves MSMEs access to formal credit. Furthermore, low default rate was reported based on firm count. Regarding credit guarantee coverage ratio - default probability nexus, this study established existence of moral hazard effect which is statistically significant. However, across different sectors, short run models find credit guarantee moral hazard sectoral bias, largely elevated in agriculture, building and construction, trade and manufacturing sectors. Additionally, default risk was found to reduce with firm age. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340176 |
| By: | Jakob Beuschlein; Jósef Sigurdsson; Horng Chern Wong |
| Abstract: | We study the effects of corporate acquisitions on workers using Swedish administrative data and document substantial, persistent earnings losses following acquisitions. These losses reflect both displacement and wage cuts among stayers from target firms. We find no evidence that increased monopsony power accounts for these wage cuts. Instead, they are concentrated in acquisitions where the acquiring-firm CEO sat on the board of the target prior to the transaction. Such acquisitions increase acquiring-firm profits and CEO pay, without affecting total employment or revenue, consistent with rent redistribution. Overall, acquisitions reduce wages and disrupt employment, with profit gains partly extracted from workers. |
| Keywords: | Mergers and acquisitions, wages, layoffs, monopsony, firm performance, managers |
| JEL: | G34 J23 J31 J42 J63 L25 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2576 |
| By: | Paolo Pinotti; Gianmarco Daniele; Marco De Simoni; Domenico Marchetti; Giovanna Marcolongo |
| Abstract: | We show that credit constraints significantly increase the risk that firms are infiltrated by organized crime, defined as the covert involvement of criminal organizations in corporate decision-making. Using confidential data on criminal investigations, credit ratings, and loan histories for the universe of Italian firms, we find that a downgrade to substandard credit status reduces credit availability by 30% over five years and increases the probability of infiltration by 5%, relative to comparable firms. A local randomization design comparing firms just above and below the downgrade threshold confirms this result. The effect is pervasive across sectors and regions, but particularly strong in real estate, where the probability of infiltration rises by 10% following a downgrade. Infiltrated firms also display higher survival rates than other downgraded firms, despite similar declines in employment and revenues. These findings suggest that organized crime can serve as a financial backstop -- sustaining non-viable businesses and potentially redirecting their strategies to serve criminal interests. |
| Keywords: | Organized crime, Firms, Bank Credit |
| JEL: | G32 K42 L25 O17 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:25101 |
| By: | Tiriongo, Samuel; Mulindi, Hillary; Nyagaka, Hesborn; Milimo, Davis |
| Abstract: | The study examines how cost of credit, digital finance and bank capital shape MSME lending and performance in Kenya. Using FinAccess 2024 microdata and bank-level panel data (2011-2024), we estimate a control-function Probit, Mundlak Random Effects Logit and System-GMM model. Results show that perceived high borrowing costs are endogenous to loan access, but become insignificant once corrected. Firm age, size, formalization and female ownership significantly improve loan access. Digital finance usage for business transactions increases approval probabilities, while urban location widens access gaps. On the supply side, capital adequacy significantly anchors sustainable loan growth. Overall, MSME performance is driven more by structural firm characteristics and credit supply conditions than by cost perceptions alone. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340174 |
| By: | Wairimu, Salome; Kiragu, Doris |
| Abstract: | Micro, small and medium enterprises (MSMEs) are critical drivers towards the growth of the economy and contribute largely towards poverty eradication and employment. In Kenya, the MSME sector contributes to 40% of GDP, and employs approximately 14.9 million. Yet, this sector continues to experience difficulties in accessing credit from financial institutions. MSMEs' find it difficult to access credit from banks while banks find it difficult to lend to MSMEs due to lack of visibility. Additionally, reliance on informal credit sources in unsustainable. MSME borrowers are often trapped in vicious cycles of indebtedness and predatory lenders hampering firms' long-term performance. As a result, this study seeks to examine the key constraints hindering MSMEs' access to formal financing and their contribution to the financing gap. Similarly, to evaluate policy interventions that can enhance credit availability and bridge the MSME financing gap. The study adopted a logit regression estimation model, with the average marginal effects used to interpret the findings. The results indicate that lenders perceive MSME borrowers as risky and use credit measures like collateral to mitigate these risks. Factors like lack of collateral, guarantors, negative CRB listing exclude MSMEs from access to credit. Therefore, there is need for policies aimed at supporting banks in extending credit to MSMEs' as well as building capacity among the MSMEs in Kenya for their growth and sustainability |
| Keywords: | Capital, Competition, Stability, Panel |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340181 |
| By: | Ndwiga, David |
| Abstract: | The paper examines the effects of commercial banks' adoption of Environmental, Social and Governance practices on Micro, Small and Medium-sized Enterprises support in Kenya. The study is underpinned on the growing demand for sustainable financing by entreprises in the wake of need for sustainable businesses. The study focused on commercial banks that have adopted ESG practices and report their sustainability progress. Using panel data analysis study found that environmental, social and governance practices integration significantly increases the number of Micro, Small and Medium-sized Enterprises trained. Conversely, banks' ESG adoption was found to positively but insignificantly affect MSME lending. The results conclude that banks' training to MSMEs is necessary but not sufficient for increased MSME lending. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340179 |
| By: | Bowden, Roger |
| Abstract: | Decisions to modify the firm's natural exposure by using derivatives should be referenced back to the maximisation of corporate value. Every firm has a natural exposure to adversity, costs that typically start well in advance of bankruptcy. The implicit value of the resulting adversity or hazard options extends a long shadow over corporate value, even in better states, and this is what hedging is designed to neutralise. The framework is used to integrate corporate value maximisation, value at risk and expected utility theory. Value at risk can be regarded as a socially imposed devise to neutralise the shareholders' limited liability exit option and will often result in over-hedging. It may be not optimal to hedge in adverse conditions: one should hedge the prospect but not the event. Modifiers such as leverage, exposure uncertainty, market incompleteness, competition and bank regulation can be explored within the same framework. |
| Keywords: | Adversity options, Capital adequacy, Conditional value at risk, Corporate value, Non Cooperative games, Generalised value at risk, Utility alignment, Hazard options, Hedging, |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:vuw:vuwecf:33498 |