Financial institution network and the certification value of bank loans

Christophe Godlewski and Bulat Sanditov ()
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Bulat Sanditov: IMT-BS - DEFI - Département Droit, Économie et Finances - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - EESC-GEM Grenoble Ecole de Management - UEVE - Université d'Évry-Val-d'Essonne - TEM - Télécom Ecole de Management

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Abstract: Social networks and reputation are believed to play important roles in mitigating informational frictions related to financial intermediation, in particular bank lending. We investigate the effect of the network and reputation of financial institutions on the certification value of bank loans using data on syndicated loans to European companies. We find that the presence of more central and reputable leaders in a syndicate substantially increases the stock market's reaction to loan announcements. This certification value is reinforced when informational frictions are more important, but vanishes in case of severe disruptions in the functioning of financial markets, such as during the financial crisis of 2008.

Keywords: Betweenness centrality; Europe; Bank loan; Syndicated lending; Social network analysis; Event study; Reputation (search for similar items in EconPapers)
Date: 2015-06-01
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Published in AFFI 2015 : 32nd International Conference of the French Finance Association, Jun 2015, Cergy, France

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Related works:
Journal Article: Financial Institutions Network and the Certification Value of Bank Loans (2018)
Working Paper: Financial institutions network and the certification value of bank loans (2018)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
Working Paper: Financial institution network and the certification value of bank loans (2015)
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