Banks’ and Financial Institutions’ Decision to Participate in Loan Syndications

Yener Altunbas, Blaise Gadanecz and Alper Kara
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Alper Kara: University of Leicester

Chapter 6 in Syndicated Loans, 2006, pp 101-125 from Palgrave Macmillan

Abstract: Abstract This chapter sheds light on the supply-side determinants of syndicated loan markets, by presenting evidence on the rationale behind the decision of banks to participate in loan syndications. First, the features of loan syndications that attract banks towards this market are discussed. Secondly, the chapter investigates the impact of banks’ structural characteristics on the decision to participate in loan syndications. For this purpose, a study undertaken by Altunbaş, Gadanecz and Kara (2005), which specifically focuses on the factors as to why banks engage or do not engage in syndicated lending, stands as a focal part of the chapter. Poorly performing banks — which have lower capital adequacy ratios, lower net interest margins and lower returns on equity and higher cost/income ratios — are found to be more involved on average in loan syndications. Policy-makers should perhaps focus more on monitoring the concentration of credit risk associated with syndicated loans held on the books of poorly performing banks.

Keywords: Total Asset; Credit Risk; Commercial Bank; Investment Bank; Saving Bank (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-59723-5_6

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DOI: 10.1057/9780230597235_6

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