They Do It Anyway: Detecting Indirect Evergreening

Kashyap, N and Mahapatro, S and Tantri, P L (2021) They Do It Anyway: Detecting Indirect Evergreening. Working Paper. SSRN.

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Abstract

We identify a novel way of evergreening loans where a low-quality bank lends to a related party of a borrower in trouble and facilitates the movement of funds to the intended beneficiary. An analysis of transactions between troubled firms and their related parties, incremental investments, and loan performance indicates that at least a part of the transactions we study indeed represent evergreening. Interestingly, unlike other known forms of evergreening, neither a comprehensive audit by the regulator nor financial markets are able to unearth the above indirect evergreening. It has significant real consequences at the firm and industry levels.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Kashyap, N
UNSPECIFIED
Mahapatro, S
UNSPECIFIED
Tantri, P L
UNSPECIFIED
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Incremental Investments, Loan Performance, Financial Markets
Subjects: Financial Management
Depositing User: Gurusrinivasan K
Date Deposited: 12 May 2021 01:48
Last Modified: 12 May 2021 01:48
URI: https://eprints.exchange.isb.edu/id/eprint/1483
Publisher URL: https://dx.doi.org/10.2139/ssrn.3775286
Publisher OA policy: https://dx.doi.org/10.2139/ssrn.3775286
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