Topic：Lending and Shareholding
Presenter: Yuejuan Yu, assistant researcher, Shandong University
Time：April 20, 2017（Thursday）10：00一11：30
Venue: Room 409, Jiageng Bld 1
Abstract：In this paper, we investigate how banks' equity stakes in their borrowers influence their credit provision to those firms in crises times. We merge unique data from the German credit register on individual bank-firm credit exposures with the security deposit statistics that includes banks' equity holdings. We find that holding equity in a firm determines bank extending credit to that firm. We also note that this relationship depends on the quality of both the borrower and the creditor. During good times, banks tend to behave conservatively and refinance firms in which they hold equity only if the firm is of good quality. However in crisis, bad banks may ever-green loans to riskier firms in which they hold equity, possibly due to their residual cash-flow rights in these firms。