Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans

Zuzana Fungacova (), Christophe J. Godlewski () and Laurent Weill ()

Working Papers of LaRGE (Laboratoire de Recherche en Gestion et Economie) from Laboratoire de Recherche en Gestion et Economie, Université de Strasbourg (France)

Abstract: The objective of this paper is to investigate whether the participation of local banks exerts an impact on the spreads of syndicated loans in Russia. Following Berger, Klapper and Udell (2001), we aim to test whether local banks possess a superior ability to solve information asymmetries. In this aim, we use a sample of 528 syndicated loans to Russian borrowers. We perform regressions of the spread on a set of variables including information on the participation of local banks, loan and borrower characteristics. Unlike former papers, we consider separately foreign banks with and without a local presence, as this presence may influence their monitoring ability and their information. We observe no significant impact of the participation of local banks in syndicated loans on the spread. We also do not find any significant influence of the presence of domestic-owned banks or foreign-owned banks on the spread. Additional estimations considering subsamples for which information asymmetries are exacerbated provide similar results. Therefore our conclusion is that local banks do not benefit from an advantage in monitoring ability and in information in Russia.

Keywords: Bank; Information asymmetry; Loan; Syndication; Russia. (search for similar items in EconPapers)
JEL-codes: G21 P34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cis, nep-cta and nep-tra
Date: 2009

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Working Paper: Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:lar:wpaper:2009-01

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