Title

Firm Size Dependence in the Determinants of Bank Term Loan Maturity

Publication Title

Journal of Business Finance & Accounting

Publication Date

1-2005

Document Type

Article

Keywords

firm size, bank, loan, maturity

Disciplines

Finance and Financial Management | Other Business

Abstract

We examine the hypothesis that firm size affects the sensitivity of bank term loan maturity to its underlying determinants. As borrower size increases, negotiating power with the lender and information transparency increase, while the lender is able to spread the fixed costs of loan production across a larger dollar value of the loan. We find strong evidence of firm size dependency in the determinants of bank term loan maturity and show that this is unrelated to syndication. Only "large" borrowers can manipulate bank loan contract terms so as to increase firm value.


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