Product market competition and credit risk

Huang, Hsing-Hua; Lee, Han-Hsing

doi:10.1016/j.jbankfin.2012.09.001

Cited by 44 publications

(26 citation statements)

References 33 publications

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“…Huang and Lee (2013) find the product market competition is a proxy for credit risk. Specifically, small firms in competitive markets have higher credit risk.…”

Section: Accepted Manuscriptmentioning

confidence: 99%

“…Specifically, we use the natural log of the number for firms (N) in the industry and the market share of the four largest firms (CR4) in the industry (Huang and Lee, 2013). A higher N suggests a more competitive market, and a higher CR4 represents a higher concentration ratio in the industry and hence lower competition.…”

Section: Variable Definitions and Summary Statisticsmentioning

confidence: 99%

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Product market competition and corporate investment: Evidence from China

Jiang

Kim

Nofsinger

et al. 2015

Journal of Corporate Finance

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“…Huang and Lee (2013) find the product market competition is a proxy for credit risk. Specifically, small firms in competitive markets have higher credit risk.…”

Section: Accepted Manuscriptmentioning

confidence: 99%

Section: Variable Definitions and Summary Statisticsmentioning

confidence: 99%

Product market competition and corporate investment: Evidence from China

Jiang

Kim

Nofsinger

et al. 2015

Journal of Corporate Finance

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“…Systematic risk impacts smaller firms more than larger firms because larger firms tend to diversify the risk more efficiently (Titman and Wessels, 1988). Huang and Lee (2013) found that market competition (one of the market risk factors) impacts credit risk and credit risk is much more sensitive to the number of firms when firm size is small. Firm size in the taxi-cab industry is small as it pertains to individual taxi-cab owner/operators.…”

Section: Impact Of Market Risk On Firm-specific Riskmentioning

confidence: 99%

Financial institutions and the taxi-cab industry: an exploratory study in Canada

Gill

Biger

Dana

et al. 2014

IJESB

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Abstract:A current challenge taxi-cab owner/operators face in Canada is the lack of financing for taxi-cabs. This article examines business opportunities and lending risk; it also provides risk management strategies for financial institutions to manage the risk of lending to the taxi-cab industry. Members of the boards of directors and shareholders from the Canadian taxi-cab industry, Financial institutions and the taxi-cab industry 327and lenders from financial institutions that do not provide financing to taxi-cab owner/operators, were interviewed. Board members and shareholders were asked about their perceptions regarding business opportunity, risk, and their willingness to provide collateral for taxi-cab loans. Lenders of financial institutions were asked about their reasons for not providing taxi-cab loans. The findings of this study show that there is a reasonably attractive opportunity for financial institutions to offer financing for taxi-cab owner/operators. However, the findings also show that there are both systematic and unsystematic risks in lending to the taxi-cab industry. This offers recommendations on risk management strategies for Canadian lenders to mitigate the risk in lending to the Canadian taxi-cab industry. Our findings may be useful for new and existing financial/lending institutions, lenders, investors, and taxi-cab owner/operators.

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“…Several theoretical papers link product market competition and the cost of debt. Huang and Lee (2013) build a theoretical model to analyze the effect of product market competition on a firm's credit risk. They show that credit spreads are positively related to the number of firms in an industry.…”

Section: Introductionmentioning

confidence: 99%

Corporate Bonds and Product Market Competition

Platt

2020

J of Financial Research

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I examine the effect of product market competition on the yield spread of corporate bonds. I find that firms that face more competitive threats also face a higher cost of corporate bond debt. After controlling for common bond‐level, firm‐level, and macroeconomic variables, my results show that bondholders of firms that are subject to increased competition demand significantly higher credit spreads than holders of otherwise similar bonds. Furthermore, this effect is more pronounced for firms that have assets that are difficult to redeploy. Overall, my findings provide evidence that competitive threats are being reflected in corporate debt prices.

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Product market competition and credit risk

Cited by 44 publications

References 33 publications

Product market competition and corporate investment: Evidence from China

Product market competition and corporate investment: Evidence from China

Financial institutions and the taxi-cab industry: an exploratory study in Canada

Corporate Bonds and Product Market Competition

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