Title: A quantitative analysis on the impacts of bank loans for small enterprises

Authors: Bingguang Li, Van T. Nguyen, Binshan Lin

Addresses: Harry F. Byrd, Jr. School of Business, Shenandoah University, 1460 University Drive, Winchester, VA 22601, USA. ' Silberman College of Business, Fairleigh Dickinson University, F.D.U. M-MS2-02, 285 Madison Avenue, Madison, NJ 07940, USA. ' Department of Management and Marketing, Louisiana State University in Shreveport, Shreveport, LA 71115, USA

Abstract: This paper examines how the management team of enterprises can build a track record for their enterprises and thereby gain investor recognition. We examine the stock market|s reaction to bank loan announcements for a sample of NASDAQ and NYSE listed firms. We classify firms according to their market capitalisation and listed exchange. We find that the stock market reacts more positively to announcements of banks loans from small capitalised firms and from NASDAQ firms. For the whole sample, the abnormal returns are significantly different from zero. We also find that the stock market reacts more positively to loan initiations than to loan renewals.

Keywords: enterprise management; bank loan announcements; firm size; asymmetric information; intermediation; small enterprises; bank loans; stock market reactions; loan initiations; loan renewals.

DOI: 10.1504/IJMED.2007.011787

International Journal of Management and Enterprise Development, 2007 Vol.4 No.2, pp.119 - 127

Published online: 22 Dec 2006 *

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