Banking market concentration and syndicated loan prices

Mi, Biao; Han, Liang

doi:10.1007/s11156-018-0781-y

Cited by 15 publications

(14 citation statements)

References 50 publications

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“…Arscott and Nini (2022) find the participation of a government-sponsored enterprise in the syndicate lowers interest rates on term loans to eligible borrowers. Furthermore, Mi and Han (2020) find that syndicated loan prices are more sensitive to lead arranger's market concentration than to borrower's market concentration. The following variables are discussed:…”

Section: Lender Characteristicsmentioning

confidence: 93%

Factors Influencing Syndicated Loan Spreads: A Review of Literature

2022

JESD

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In this paper we review the literature on factors influencing syndicated loan spreads, the mechanics and the direction of the impact. The review is structured around four major groups of factors on syndicated loan spreads: loan characteristics, borrower characteristics, country characteristics and lender characteristics. It is intended to facilitate the development of testable hypotheses for different time periods and different geographical samples of countries. It can also serve as a guide for policymakers looking to identify potential indicators that can serve as a basis for further analyses in order to provide recommendations for lowering the cost of funding for borrowing firms.

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Section: Lender Characteristicsmentioning

confidence: 93%

Factors Influencing Syndicated Loan Spreads: A Review of Literature

2022

JESD

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“…Another stream of research studies the effect of information asymmetries on the structure of loan syndicates (Aldasaro et al, 2022;Arscott and Nini, 2022). A less abundant stream of literature focuses on syndicated loan pricing (Lambertini and Mukherjee, 2022;Mi and Han, 2020;Moutinho et al, 2022). This study contributes to the syndicated loan pricing research stream and is most closely related to Altunbas and Gadanecz (2004), Focarelli et al (2008) and Haselmann and Wachtel (2011).…”

Section: Literature Reviewmentioning

confidence: 94%

Determinants of Syndicated Loan Spreads in Central, Eastern and South-Eastern European Countries

2022

JESD

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Despite the importance of the syndicated loan market as a source of international financing there is limited evidence on factors influencing syndicated loan pricing in European developing economies. Focusing in one particular region reduces the problem of cross-country heterogeneity and provides more specific policy recommendations for reducing the cost of funding for firms, in an environment where capital markets are less developed, and banks are seen as the main source of funding. This study investigates the determinants of syndicated loan spreads in a sample of 1004 syndicated loans from the Thomson One Banker database, granted to borrowers from 12 Central, Eastern and South-Eastern European countries. The results show that loan and country characteristics are the most significant determinants of syndicated loan spreads. Lenders seem to price loan characteristics in European transition economies in accordance with the existing academic literatureriskier loans are charged higher spreads. Augmenting the Thomson One Banker with the Worldscope database, we further find that borrower characteristics are generally significant determinants of syndicated loan spreads however their significance weakens once country characteristics are taken into account. Lender characteristics are found not to be significant determinants of syndicated loan spreads in European transition economies. The implication of these results is that governments of European transition countries have a major role to play in providing a macro-economic and legal infrastructure that will enable borrowing firms to get access to funding sources at lower spreads.

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“…This is because the monopoly power in banking sector would drive interest rates high and credit supply low, resulting in a loss of overall market efficiencies (Stein 2002;Beck et al 2004). Competition, instead, improves the availability of external finance and lowers the costs of finance for businesses (Lian 2018;Mi and Han 2018).…”

Section: Related Literaturementioning

confidence: 99%

Bank competition, information specialization and innovation

Tian

Han

2019

Rev Quant Finan Acc

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Complementary to rich existing evidence on bank competition and corporate innovation, this paper aims to investigate the impacts of bank competition on innovation efficiencies, in terms of both R&D input and output at firm level. By acknowledging the role played by information asymmetries in financing innovation, we also examine the moderating effects of information specialization at both industry and firm level on corporate innovation. Analyzing innovation and bank structure data from U.S. between 1992 and 2010, we show novel evidence that increased bank competition improves innovation efficiencies in terms of both R&D input (investment) and output (patents and profits generated by R&D). In addition, we find bank competition has a greater favorable effect on innovation for those firms with more specialized information, such as those operating in an industry with more dispersed productivity growth and those with more concentrated patent types. Overall, our findings support market power hypothesis and banking strategic theory where bank competition improves credit supply to corporate innovation.

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Banking market concentration and syndicated loan prices

Cited by 15 publications

References 50 publications

Factors Influencing Syndicated Loan Spreads: A Review of Literature

Factors Influencing Syndicated Loan Spreads: A Review of Literature

Determinants of Syndicated Loan Spreads in Central, Eastern and South-Eastern European Countries

Bank competition, information specialization and innovation

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