Internal liquidity risk, financial bullwhip effects, and corporate bond yield spreads: Supply chain perspectives

Tsung-Kang Chen, Hsien Hsing Liao*, Hui Ju Kuo

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

18 Scopus citations

Abstract

This study explores internal liquidity risk (ILR) and financial bullwhip effects on corporate bond yield spreads along supply chain counterparties by employing American market data from year 1997 to 2008. This study finds that the ILRs of suppliers and customers positively affect a firm's bond yield spreads and the effects of customers' ILRs are greater. This research also finds a financial bullwhip effect that the ILR effect becomes greater upwardly along the supply chain counterparties. The results are robust when controlling for well-known spread determinant variables.

Original languageEnglish
Pages (from-to)2434-2456
Number of pages23
JournalJournal of Banking and Finance
Volume37
Issue number7
DOIs
StatePublished - 1 Jul 2013

Keywords

  • Bond yield spreads
  • Financial bullwhip effect
  • Internal liquidity risk
  • Supply chain

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