New paper on @SSRN: Initial Conditions and the Private Debt Renegotiation Process

Abstract:

I investigate whether and how initial conditions around loan origination influence private debt renegotiation process. I model the renegotiation likelihood, and the conditional probability of multiple renegotiation rounds or multiple amended terms using a sequential logit model. I use a large sample of 15,000 loans on the European credit market. I find that contractual (covenants and collateral) and organizational (lenders pool size, reputation and relationship) mechanisms mitigating adverse selection and moral hazard risks have the largest and positive economic impacts. Lenders financial conditions (capitalization and credit portfolio exposure) and institutional arrangement aiming at creditors protection significantly impact the renegotiation process.

 

SSRN link to full paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2910032

More of my papers on SSRN: https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=347791

Our article “Do the Type of Sukuk and Choice of Shari’a Scholar Matter?” published in JEBO

Highlights

• We examine sukuk, the shari’a-compliant alternative mode of financing to conventional bonds.
• 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 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.

Abstract

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.

Personal article link which will provide free access to the article and is valid for 50 days until March 05, 2017: https://authors.elsevier.com/a/1UO0Cc24afuFc

French Finance Association (AFFI) Conference 2016

My summer conferences season kicks off tomorrow, with the French Finance Association (AFFI) Conference 2016, organized this year by HEC-Management School of the University of Liège.

Here is the detailed program: link

I will present my paper on “Debt renegotiation and the design of financial contracts“, here are the (tentative and preliminary) slides: figshare or slideshare.

Looking forward to see all my collegues in the field of finance from France and from abroad.

The social program looks very exciting !