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Determinants of syndicated lending in European banks and the impact of the financial crisis

Barry Howcroft, Alper Kara () and David Marques-Ibanez ()

Journal of International Financial Markets, Institutions and Money, 2014, vol. 32, issue C, 473-490

Abstract: Syndicated lending is a widely practiced alternative to traditional bilateral lending and within Europe the syndicated loan market increased significantly during the 2000s. Using a dataset consisting of 4166 European banks, the authors examine the factors that determine the bank's willingness to use syndicated lending rather than traditional lending during the period 2000–2010. The paper finds that syndicated lending was an alternative to bilateral loans when banks were targeting growth or looking to utilize potential capital surpluses. Syndicated lending was also used to improve the returns and credit quality of the bank's loan portfolios. However, in the post crisis period, European banks are less interested in syndicated loan markets and larger banks, especially, those with strong capital bases, are refraining from syndicated lending.

Keywords: Syndicated loans; Bilateral lending; Financial crisis (search for similar items in EconPapers)
JEL-codes: F3 G2 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.intfin.2014.07.005

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Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

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