Bank loan renegotiation and financial institutions' network

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) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris]

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Abstract: We investigate how lender's capacity of sourcing information about a borrower, proxied by its centrality in the networks of syndicated lending, influences the process of bank loan renegotiation. Using a large sample of more than 6000 loans issued in 25 European countries we find that the presence of network-central and better-informed lenders in a syndicate has a significant impact on the renegotiation process, increasing the likelihood of renegotiation, the number of renegotiation rounds, and the number of amendments to the loan agreement. Our findings survive numerous robustness checks and confirm that access to superior information encourages private debt renegotiation.

Keywords: Financial contracts; Bank loan; Renegotiation; Syndicated lending; Social network analysis; Lender network; Lender centrality; Sustainable Development Goals (search for similar items in EconPapers)
Date: 2024-10
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Published in International Review of Financial Analysis, 2024, 95 (Part B), pp.103409. ⟨10.1016/j.irfa.2024.103409⟩

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Journal Article: Bank loan renegotiation and financial institutions' network (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04642628

DOI: 10.1016/j.irfa.2024.103409

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