Duration of syndication process and syndicate organization
AbstractWhat is the influence of syndicate organization on the duration of a loan syndication process? We answer this question using the survival analysis methodology on a sample of loans to borrowers from 59 countries. We find that syndicate size, concentration, experience, reputation, and national diversity clearly matters for the duration of a syndication process and therefore for borrower satisfaction regarding the speed of obtaining the necessary funding. A syndicate organization adapted to specific agency problems of syndication, with numerous, reputable, and experienced arrangers retaining a larger portion of the loan reduces the duration. The latter is also shorter when more lenders come from the same country as the borrower. These effects are more pronounced when the borrower has a low reputation on the syndicated lending market and when his opacity is stronger.
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Bibliographic InfoPaper provided by Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg (France) in its series Working Papers of LaRGE Research Center with number 2008-20.
Date of creation: 2008
Date of revision:
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Syndicated loan; syndication process; syndicate organiza- tion; agency costs; experience; reputation; nationality; survival analysis.;
Find related papers by JEL classification:
- F30 - International Economics - - International Finance - - - General
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-07 (All new papers)
- NEP-BAN-2008-12-07 (Banking)
- NEP-CFN-2008-12-07 (Corporate Finance)
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