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The Agency Structure of Loan Syndicates

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  • Pascal François
  • Franck Missonier-Piera

Abstract

Leaders of loan syndicates often delegate some administrative tasks to banks known as co-agents. One reason is that co-agents are specialized banks that help split the costs of managing the syndicate. Another reason is that co-agents monitor the leader on behalf of syndicate members to mitigate informational asymmetry problems. Large sample tests on the Dealscan database provide support for both arguments. Evidence of repeated contracting between the same banks explains the moderate magnitude of monitoring effects. Copyright 2007, The Eastern Finance Association.

Suggested Citation

  • Pascal François & Franck Missonier-Piera, 2007. "The Agency Structure of Loan Syndicates," The Financial Review, Eastern Finance Association, vol. 42(2), pages 227-245, May.
  • Handle: RePEc:bla:finrev:v:42:y:2007:i:2:p:227-245
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6288.2007.00169.x
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    Cited by:

    1. Bos J.W.B. & Contreras M.G. & Kleimeier S., 2016. "Self-regulation in collaborative environments : the case of the equator principles in banking," Research Memorandum 007, Maastricht University, Graduate School of Business and Economics (GSBE).

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