Mind the Gap: The Difference between U.S. and European Loan Rates

Tobias Berg, Anthony Saunders, Sascha Steffen and Daniel Streitz

The Review of Financial Studies, 2017, vol. 30, issue 3, 948-987

Abstract: We analyze pricing differences between U.S. and European syndicated loans over the 1992–2014 period. We explicitly distinguish credit lines from term loans. For credit lines, U.S. borrowers pay significantly higher spreads, but lower fees, resulting in similar total costs of borrowing in both markets. Credit line usage is more cyclical in the United States, which provides a rationale for the pricing structure difference. For term loans, we analyze the channels of the cross-country loan price differential and document the importance of: the composition of term loan borrowers and the loan supply by institutional investors and foreign banks.

JEL-codes: G15 G20 G30 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (29)

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