Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212183
Authors: 
Fang, Yiwei
Francis, Bill
Hasan, Iftekhar
Wang, Haizhi
Year of Publication: 
2011
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 4/2011
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper examines the effects of strategic alliances on non-financial firms bank loan financing. We construct several measures to capture firms alliance activities using the frequency of alliance activities, the prominence of the alliance partner and the relative networking position in the overall alliance network. We find that firms with active alliance involvement experience a lower cost of debt from banks. We also document that allying with a prestigious partner (ie S&P 500 firms) can provide an endorsement effect and benefit the borrowers by reducing the price of bank loans. Moreover, a borrowing firm positioned at the centre of an alliance network enjoys a lower cost of bank loans. Finally, we find that borrowing firms with alliance experience are less likely to use collateral and covenants in their loan contracts.
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-663-7
Document Type: 
Working Paper

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