Multiple lenders and corporate distress: Evidence on debt restructuring

Antje Brunner and Jan Krahnen ()

No 2001/04, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: In the recent theoretical literature on lending risk, the coordination problem in multi-creditor relationships have been analyzed extensively. We address this topic empirically, relying on a unique panel data set that includes detailed credit-file information on distressed lending relationships in Germany. In particular, it includes information on creditor pools, a legal institution aiming at coordinating lender interests in borrower distress. We report three major findings. First, the existence of creditor pools increases the probability of workout success. Second, the results are consistent with coordination costs being positively related to pool size. Third, major determinants of pool formation are found to be the number of banks, the distribution of lending shares, and the severity of the distress shock.

Keywords: bank lending; distress; workout; coordination risk (search for similar items in EconPapers)
JEL-codes: D74 G21 G33 G34 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Multiple Lenders and Corporate Distress: Evidence on Debt Restructuring (2008)
Working Paper: Multiple Lenders and Corporate Distress: Evidence on Debt Restructuring (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:200104

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