Indirect Evergreening Using Related Parties: Evidence From India

Kashyap, N and Mahapatro, S and Tantri, P L (2021) Indirect Evergreening Using Related Parties: Evidence From India. 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 an insolvent borrower, and the loan recipient transfers the funds to the insolvent borrower using internal capital markets. Internal capital market transactions, incremental investments, interest rates charged, and loan delinquency rates collectively indicate evergreening. These loans are unlikely to represent arm's length transactions or rescue of troubled related firms by stronger firms to prevent
group-wide spillover effects. Indirect evergreening is less likely to be detected by regulatory audits. 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: Evergreening, Zombie lending, Regulatory Forbearance, Banking, Related Party Transactions
Subjects: Finance
Depositing User: Gurusrinivasan K
Date Deposited: 02 Feb 2022 05:07
Last Modified: 02 Feb 2022 05:07
URI: https://eprints.exchange.isb.edu/id/eprint/1617
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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