The Impact of CDS Trading on the Cost of Bank Loan

Keng-Yu Ho, Yu-Jen Hsiao, Sin-Yi Huang

Research output: Contribution to journalArticle

Abstract

This paper investigate the impact of Credit Default Swaps (CDSs) trading on the cost of bank loan during 2001 to 2012. Theoretically, the CDS trading have lowered the cost of bank loan to firms by creating risk sharing opportunities and reducing bank monitoring and information cost. However, as a whole, we only find limited evidence that the CDS trading have lowered the cost of bank loan but the impact is stronger for smaller firms, those firms with higher liquidity in the CDS market, and bank loan market in Asia. Nevertheless, there is strong evidence, during the recent financial crisis period, those firms with CDS trading faced higher bank loan spread than those not with CDS trading.
Translated title of the contributionCDS交易對公司取得銀行放款成本的影響
Original languageEnglish
Pages (from-to)291-322
Number of pages32
Journal中山管理評論
Volume24
Issue number2
DOIs
Publication statusPublished - Jun 1 2016

Keywords

  • 信用違約交換
  • 貸款利率
  • 流動性
  • Credit Default Swaps
  • Loan Spread
  • Liquidity

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