Bank competition and the design of syndicated loans

Chongyang Chen and Robert Kieschnick

The Financial Review, 2024, vol. 59, issue 1, 227-251

Abstract: We study the effect of bank competition on the design of syndicate loans. We find that competition in the lead lender's market plays a significant role in determining the terms of the syndicate loans. Specifically, higher concentration leads to higher yield spreads, larger issues, shorter maturities, greater contract intensity, and more collateral requirements, but with a greater likelihood of performance pricing. We also find the prior banking relationships, anti‐takeover provisions and whether the lead bank is a national, regional, or state bank influence the designs of these loans.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:59:y:2024:i:1:p:227-251

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