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How Do Banks Respond to Supplier IPOs?

Sung C. Bae et al.

Financial Markets, Institutions and Instruments2025https://doi.org/10.1111/fmii.12212article
AJG 3ABDC A
Weight
0.37

Abstract

This paper examines how supplier IPO events affect their key customers’ cost of debt. The evidence reveals that average loan spreads for customers increase by roughly 20% (23.7 basis points) following suppliers’ IPO events. This negative spillover effect is more pronounced when suppliers make significant relationship‐specific investments (high switching cost), when suppliers face less concentrated customer bases, or when customers face more concentrated supplier bases. Our results show that customers receive less favourable trade terms and are forced to pay more for inputs after their suppliers go public, all of which increase customers’ operational costs, risk and subsequent borrowing costs. Furthermore, we document that customer loan contracts become significantly more restrictive after a supplier's IPO. Finally, we find that the observed negative spillover effect is also present in customers’ access to the public bond market.

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https://doi.org/https://doi.org/10.1111/fmii.12212

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@article{sung2025,
  title        = {{How Do Banks Respond to Supplier IPOs?}},
  author       = {Sung C. Bae et al.},
  journal      = {Financial Markets, Institutions and Instruments},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/fmii.12212},
}

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How Do Banks Respond to Supplier IPOs?

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.