Welcome to my personal website

About me

Full academic CV: english / français

Representative selected publications

* All my publications can be found using the links from the RHS menu *

"How legal and institutional environments shape the private debt renegotiation process?", Journal of Corporate Finance, 2020, vol. 62. [link]

I investigate how legal and institutional conditions around loan origination influence a private debt renegotiation process. Using a large sample of 15,000 loans on the European credit market, I apply a sequential logit model to consider the renegotiation likelihood, the conditional probability of multiple renegotiation rounds or multiple amended terms, and the renegotiation outcomes conditional on specific loan amendments. I find that legal systems with stronger protection of creditors control rights have a positive influence on renegotiation likelihood and favorable outcomes on amendments to amount or maturity. Stronger legal protection reduces renegotiation likelihood when creditors face potential strategic default by shareholders. The legal and institutional environment has a significant effect on how the initial design of the financial contract impacts the renegotiation process.

"Debt Renegotiation and the Design of Financial Contracts", Journal of Financial Services Research, 2019, vol. 55(2-3), 191-215. [link]

This study examines the design of financial contracts after renegotiations. It focuses on the degree of renegotiation as measured by the number of amendments to the contract. I find that the design of renegotiated financial contracts is not homogenous, although the most frequent amendments are to the loan’s amount and maturity. I show that the number of amendments increases with longer maturities. Collateral and bank reputation have the opposite effect. Creditors friendly environments with fewer renegotiation frictions increase the number of amendments. Overall, contractual, organizational, and legal features have a significant influence on the design of financial contracts after renegotiation.

"Financial Institutions Network and the Certification Value of Bank Loans", (with B. Sanditov), Financial Management, 2018, vol. 47(2), 253-283. [link]

Social networks play an important role in mitigating informational frictions related to financial intermediation, especially bank lending. We investigate the effect of the network of financial institutions on the certification value of bank loans using data on syndicated loans to European companies. We find that the presence of more central leaders in a syndicate substantially increases the stock market’s reaction to loan announcements. This certification value is reinforced when informational frictions are more important but vanishes when there are severe disruptions in the functioning of financial markets, such as during the financial crisis of 2008.

"How Sukuk Shape Firm Performance", (with P.-O. Klein & L. Weill), World Economy, 2018, vol. 41(3), 699-722. [link]

With the large expansion of Islamic finance in the recent years, sukuk, which are the Sharia-compliant substitute to conventional bonds, are now becoming more prominent. The aim of this study was to examine the impact of sukuk issuance on firm performance. To do so, we analyse how stock market performance and operating performance (OP) are influenced by issuance of sukuk and bonds on a sample of Malaysian listed companies. We consider the short-term and medium-term stock market reaction through the computation of cumulative abnormal returns and buy-and-hold abnormal returns. We investigate the impact on OP by performing regressions and by calculating abnormal operating performance (AOP) so that we can compare how issuance affects similar firms. We find that sukuk issuance generates a negative stock market reaction both in the short term and in the medium term. We also find evidence that issuing sukuk hampers OP. The analysis of AOP shows that sukuk issuers have better performance than their matched bond issuers, but that sukuk contributes to reduce the gap in performance over time. Overall, our results support the view that sukuk issuance hampers stock market performance, but that it is not attributable to a signalling effect on the bad financial situation of the issuer. We interpret our findings as evidence of adverse selection taking place on the financed projects and agency problems stemming from the specific sukuk structuring with stock market investors more reluctant to invest in sukuk issuers.

"Do the type of sukuk and choice of shari’a scholar matter?", (with R. Turk-Ariss & L. Weill), Journal of Economic Behavior & Organization, 2016, vol. 132(S), 63-76. [link]

Sukuk, the shari’a-compliant alternative mode of financing to conventional bonds, have considerably expanded over the last decade. We analyze the stock market reaction to two key features of this instrument: sukuk type and characteristics of the shari’a scholar certifying the issue. We use the event study methodology to measure abnormal returns for a sample of 131 sukuk from eight countries over the period 2006–2013 and find that Ijara sukuk structures exert a positive influence on the stock price of the issuing firm. We observe a similar positive impact from shari’a scholar reputation and proximity to issuer. Overall our results support the hypotheses that the type of sukuk and the choice of scholars hired to certify these securities matter for the market valuation of the issuing company.

"The certification value of private debt renegotiation and the design of financial contracts: Empirical evidence from Europe", Journal of Banking & Finance, 2015, vol. 53(C), 1-17. [link]

By using a sample of bank loan renegotiations by European firms, I show that the renegotiation of financial contracts bears a certification value, while deeply changing the contractual features of the loan over time, to the benefit of shareholders. I find that amendments to financial covenants and to loan amounts increase the cumulative abnormal returns of a borrowing firm by 10–15%. Early and less frequent renegotiations of bilateral loans with short maturities also imply a positive stock market reaction. Amendments signaling the early accrual of new and positive information allow increasing firm value.

"Sukuk vs. conventional bonds: A stock market perspective", (with R. Turk-Ariss & L. Weill), Journal of Comparative Economics, 2013, vol. 41(3), 745-761. [link]

The last decade witnessed a wide expansion of Islamic finance in Middle Eastern and Southeast Asian countries. Sukuk issues, which are Islamic financial instruments structured to replicate the cash flows of conventional bonds, have notably proliferated, fuelling the debate on the similarity between Islamic and conventional finance. Using an event study methodology on a sample of Malaysian listed companies, we investigate whether stock market investors react differently to the announcements of sukuk and conventional bond issues. We find that the stock market is neutral to announcements of conventional bond issues, but it reacts negatively to announcements of sukuk issues. We attribute this finding to the excess demand for Islamic investment certificates and to an adverse selection mechanism that favors sukuk issuance by lower-quality debtor companies.

"Bank Competition and Collateral: Theory and Evidence", (with C. Hainz, L. Weill), Journal of Financial Services Research, 2013, vol. 44 (2), 2013, 131-148 [link]

We investigate the impact of bank competition on the use of collateral in loan contracts. We analyze asymmetric information about the borrowers’ type in a Salop model in which banks choose between screening the borrower and asking for collateral. We show that the presence of collateral is more likely when bank competition is low. We then test this prediction empirically on a sample of bank loans from 70 countries. We perform logit regressions of the presence of collateral on bank competition, measured by the Lerner index. Our empirical tests corroborate the theoretical predictions that bank competition reduces the presence of collateral. These findings survive several robustness checks.

"Bank Lending Networks, Experience, Reputation, and Borrowing Costs: Empirical Evidence from the French Syndicated Lending Market", (with B. Sanditov & T. Burger-Helmchen), Journal of Business Finance & Accounting, 2012, vol. 39(1-2), 113-140. [link]

We investigate the network structure of bank lending markets and evaluate the impact of lenders’ network centrality, considered a measure of their experience and reputation, on borrowing costs. We show that the French market for syndicated bank loans is a ‘small world’ characterized by large local density and short social distances between lenders. Such a network structure allows for better information and resources flows between banks thus enhancing their social captial. We then show that lenders’ experience and reputation play a significant role in reducing loan spreads and thus increasing borrower’s wealth.

"Does Collateral Help Mitigate Adverse Selection ? A Cross-Country Analysis", (with L. Weill), Journal of Financial Services Research, 2011, vol. 40(1-2), 59-78. [link]

In this paper, we empirically investigate whether collateral mitigates adverse selection problems in a loan market. Theory predicts a negative relation between the presence of collateral and the interest spread of a loan. However, bankers’view and most empirical evidence contradict this prediction and support the observed-risk hypothesis instead. We provide new evidence from a sample of 4,940 bank loans from 31 countries. We test whether the degree of information asymmetry affects the positive link between collateral and the loan spread and find that a greater degree of information asymmetry reduces this positive relation. This finding provides support for both the adverse selection and observed-risk hypotheses.

Selected working papers

* All my working papers are available at RePEc and/or SSRN *

  1. “Determinants of bank income smoothing: Cross-country evidence from EEA banks during the COVID-19 pandemic crisis,” Working Papers of LaRGE Research Center 2024-03 (with M. Olszak, G. Bachurewicz)
  2. “Macroprudential Policy And Corporate Loans” Working Papers of LaRGE Research Center 2024-01 (with M. Olszak)
  3. “Macroprudential policy and net interest margin in European banks,” Working Papers of LaRGE Research Center 2023-05 (with M. Olszak, I. Kowalska, A. Wysocka)
  4. “Macroprudential policy tightening, loan loss provisioning and income smoothing: Empirical evidence from European Economic Area banks,” Working Papers of LaRGE Research Center 2023-02 (with M. Olszak, S. Roszkowska, D. Skala)
  5. “Silence is not golden anymore? Social media activity and stock market valuation in Europe,” Working Papers of LaRGE Research Center 2022-04 (with K. Byrka-Kita, R. Gola, J. Cypryjanski)
  6. “Private debt renegotiation and financial institutions’ network,” Working Papers of LaRGE Research Center 2020-01 (with B. Sanditov)
  7. “The effects of bank loan renegotiation on corporate policies and performance,”Working Papers of LaRGE Research Center 2018-01
  8. “Initial conditions and the private debt renegotiation process,” Working Papers of LaRGE Research Center 2017-03

Recent conferences and seminars

(presentation by co-author is marked with *)

2023

  • 17th International Conference Computational and Financial Econometrics, Berlin-Germany*
  • International Conference in Finance, Banking and Accounting, Montpellier
  • Financial Engineering and Banking Society Conference, Chania-Greece*
  • Conference on International Finance; Sustainable and Climate Finance and Growth, Ljubljana-Slovenia*
  • 16th International Risk Management Conference, Florence, Italy*

2022

  • Financial Engineering and Banking Society Conference, Portsmouth-UK*
  • 38th Symposium of the Money, Banking and Finance (GDRE), Strasbourg
  • Multinational Finance Society Conference, Gdansk-Poland
  • 15th International Risk Management Conference, Bari-Italy*

2021

  • Invited presentation, « Journée de recherche – Industrie financière et valeur », Nancy
  • Financial Engineering and Banking Society Conference, Lille