Bank Lending Networks, Experience, Reputation, and Borrowing Costs: Empirical Evidence from the French Syndicated Lending Market
We investigate the network structure of bank lending markets and evaluate the impact of lenders' network centrality, considered a measure of their experience and reputation, on borrowing costs. We show that the French market for syndicated bank loans is a ‘small world' characterized by large local density and short social distances between lenders. Such a network structure allows for better information and resources flows between banks thus enhancing their social captial. We then show that lenders' experience and reputation play a significant role in reducing loan spreads and thus increasing borrower's wealth.
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Volume (Year): 39 (2012)
Issue (Month): 1-2 (January)
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