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External support and bank behaviour in the international syndicated loan market

Author

Listed:
  • Blaise Gadanecz
  • Kostas Tsatsaronis
  • Yener Altunbas

Abstract

Banks that enjoyed generous external financial support tended to under-price risk in the international syndicated loan market and did not show signs of innovation in their loan participations. Loans arranged by such banks had on average lower spreads (controlling for risk and other characteristics) and these banks retained loans that were on average priced below market. When supported banks' investment strategy differed materially from that of the average bank it was in holding less specialised portfolios, in aligning more closely with market trends, and in exhibiting lower persistence in their sectoral allocations.

Suggested Citation

  • Blaise Gadanecz & Kostas Tsatsaronis & Yener Altunbas, 2008. "External support and bank behaviour in the international syndicated loan market," BIS Working Papers 265, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:265
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    Cited by:

    1. Makoto Nirei & Vladyslav Sushko & Julián Caballero, 2016. "Bank Capital Shock Propagation via Syndicated Interconnectedness," Computational Economics, Springer;Society for Computational Economics, vol. 47(1), pages 67-96, January.
    2. Michael Brei & Blaise Gadanecz, 2012. "Have public bailouts made banks' loan books safer?," BIS Quarterly Review, Bank for International Settlements, September.

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    Keywords

    external support; portfolio choices; risk taking; banks; syndicated loans;
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