The paper examines the impact of business group affiliation on cost of loans in an emerging market setting. Bank loans are dominant source of corporate funding, specifically in emerging markets, in which business groups exist as leading economic entities. The impact of belonging to a group on the firm's cost of capital is important to understand. Overall, findings suggest that cost of borrowing advantages/disadvantages exist for business groups and their affiliated firms. Business groups may create borrowing cost advantages by their implemented policies and the selection of their loan applicant firms at the time of their borrowing.
A. Melih Kullu. "Cost of Loans and Group Affiliation." Proceedings of the New York State Economics Association. vol. 7, October 2014, p. 79-87
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