Operations in offshore financial centers and loan syndicate structure

Wenxia Ge, Jeong-Bon Kim, Tiemei Li and Yutao Li

Journal of Empirical Finance, 2018, vol. 45, issue C, 157-180

Abstract: This study examines whether a firm’s subsidiary operations in offshore financial centers (OFCs) affect loan syndicate structure. We find that as borrowers engage more aggressively in operations in OFCs, lead lenders of a loan syndicate hold a larger percentage of loans to such firms and the number of lenders participating in a loan syndicate becomes smaller. This finding is robust to various robustness tests including propensity score matching analysis and quasi-natural experiment. Furthermore, we find that lead lender reputation and prior lending relationship with the borrower can attenuate the positive relation between OFC operations and loan syndicate concentration.

Keywords: Multi-national firms; Financial contracting; Offshore financial center; Information asymmetry; Loan syndicate structure (search for similar items in EconPapers)
JEL-codes: F34 F36 G15 G21 G32 K22 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:45:y:2018:i:c:p:157-180

DOI: 10.1016/j.jempfin.2017.11.002

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