Abstract
This paper expands the commercial bank certification literature by examining the role of banks as issuers of standby letters of credit in the corporate tax-exempt debt market. While considerable evidence for such a role is observed in the equity markets, little has been done to focus on the debt markets. The certification influence of the bank is confirmed as the market reacts positively to not only the employment of the letter of credit but also the quality of the bank providing this form of credit enhancement. The results also substantiate the role of the rating agency as the principle means by which the bank certification effect is transmitted to the market.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
