紀要論文

How Large Creditors Affect Corporate Bond Prices through Creditor Coordination

eng

09111247

https://doi.org/10.15002/00003133

22

31

49

2008-03

Version of Record

We investigate the role of large creditors such as Japanese main banks in determining the prices of corporate bonds when creditors face coordination problems. We present a model in which a single large creditor and a group of small creditors independently decide whether to continue lending to a borrowing company without common knowledge of the company’s fundamentals. Our numerical calculations in the model show that when these fundamentals are good enough, corporate bond values fall as the information available to the large creditor deteriorates. However, when the fundamentals are bad enough, corporate bond values rise as the information available to the large creditor deteriorates. These results suggest that, for both the borrowing company and its bond holders, whether a better informed large creditor is beneficial or detrimental crucially depends on the strength of the company’s fundamentals.

Article

AA10459262