The Agency Structure of Loan Syndicates

Pascal François and Franck Missonier‐Piera
Authors registered in the RePEc Author Service: Franck MISSONIER-PIERA

The Financial Review, 2007, vol. 42, issue 2, 227-245

Abstract: Leaders of loan syndicates often delegate some administrative tasks to banks known as co‐agents. One reason is that co‐agents are specialized banks that help split the costs of managing the syndicate. Another reason is that co‐agents monitor the leader on behalf of syndicate members to mitigate informational asymmetry problems. Large sample tests on the Dealscan database provide support for both arguments. Evidence of repeated contracting between the same banks explains the moderate magnitude of monitoring effects.

Date: 2007
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