MAN Seminar: “Why Do Firms Borrow from Foreign Banks,” Ümit Yılmaz (Universita della Svizzera Italiana), MA-330, 1:40PM February 7 (EN)

Date: 07 February 2020, Friday
Time: 13:40-14:40
Place: Faculty of Business Administration,
Ümit Berkman Seminar Room (MA-330)

“Why Do Firms Borrow from Foreign Banks”
Ümit Yılmaz
Universita della Svizzera Italiana

Abstract: I examine U.S. firms’ motives for participating in cross-border syndicated loans with foreign banks. Firms borrowing from foreign lead arrangers pay higher interest rates on their loans compared to firms borrowing from local banks, controlling for firm and loan characteristics and using matched sample analyses. These firms experience an increase in foreign income and international M&A activity after the loan, which suggests that global expansion of operations is an important reason why a firm borrows beyond borders. I also find that loan spreads increase with the geographic and cultural distance between borrowers and foreign lenders, consistent with higher information acquisition and monitoring costs.