Journal of Strategic Management Studies
Online ISSN : 2434-124X
Print ISSN : 1883-9843
Research Article
Alternative Determinants of Lending Decisions: The Effects of Cultural and Institutional Distance on Financing Liquefied Natural Gas Projects
Tsuyoshi Sato
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2023 Volume 15 Issue 1 Pages 1-16


This study investigates whether cultural and institutional distance impact financial institutions’ lending decisions and whether there is an interaction effect between key parties’ creditworthiness and cultural and institutional distance. This study performs an empirical analysis applying a logistic regression model based on 4,928 lending judgment observations of 176 financial institutions that made lending decisions on 28 liquefied natural gas (LNG) projects. We found that financial institutions make lending decisions under the influence of not only economic rationality but normative rationality. However, there is little empirical research on lending decisions based on normative rationality. This study proposes an alternative approach to considering the determinants of financial institutions’ lending decisions.

The research limitation is that the explained variable is a binary value equal to 1 for lending and 0 otherwise. If the loan amount, which is a continuous variable, can be used as the explained variable, it will be possible to estimate the magnitude of the impact of each explanatory variable. The results of this study include recommendations for practitioners, especially those seeking to raise funds. This study proposes that borrowers will find it easier to raise funds if they pay more attention to factors related to institutions and culture.

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© 2023 The International Academy of Strategic Management
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