Developing country economic structure and the pricing of syndicated credits
We analyse in an extensive risk return framework the determinants of the pricing of 5,000-plus syndicated credits granted to developing country borrowers between 1993 and 2001. Syndicated loans with riskier characteristics or granted to riskier borrowers are found to be more expensive than others, although the effect of purely microeconomic price determinants is in several instances weaker when macroeconomic conditions in borrowers' countries are also controlled for. In addition to individual loan or borrower considerations, lenders seem to focus more on macroeconomic factors to determine the pricing of their loans, such as the level of exports relative to debt service in the developing countries where the borrowers are located. For some, this means restricted access to external financing. We detect possible evidence of lenders exploiting their market power. Certain banks appear to charge a premium to change initially agreed loan terms. Furthermore, discounts are granted on developing country loans provided by small groups or clubs of relationship banks rather than on facilities with the participation of a large number of institutions.
|Date of creation:||Jul 2003|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (41) 61 - 280 80 80
Fax: (41) 61 - 280 91 00
Web page: http://www.bis.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Xavier Freixas & Jean-Charles Rochet, 1997. "Microeconomics of Banking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061937, June.
- Feder, Gershon & Just, Richard E., 1977. "An analysis of credit terms in the eurodollar market," European Economic Review, Elsevier, vol. 9(2), pages 221-243.
- Paolo Mauro & Nathan Sussman & Yishay Yafeh, 2002.
"Emerging Market Spreads: Then Versus Now,"
The Quarterly Journal of Economics,
MIT Press, vol. 117(2), pages 695-733, May.
- Yishay Yafeh & Paolo Mauro & Nathan Sussman, 2000. "Emerging Market Spreads: Then Versus Now," IMF Working Papers 00/190, International Monetary Fund.
- Paolo Mauro & Yishay Yafeh & Nathan Sussman, 2001. "Emerging Market Spreads: Then Versus Now," OFRC Working Papers Series 2001fe03, Oxford Financial Research Centre.
- Paolo Mauro, 2000. "Emerging Market Spreads: Then Versus Now," Economics Series Working Papers 2001-FE-03, University of Oxford, Department of Economics.
- Eichengreen, Barry & Mody, Ashoka, 1999.
"Lending booms, reserves, and the sustainability of short-term debt - inferences from the pricing of syndicated bank loans,"
Policy Research Working Paper Series
2155, The World Bank.
- Eichengreen, Barry & Mody, Ashoka, 2000. "Lending booms, reserves and the sustainability of short-term debt: inferences from the pricing of syndicated bank loans," Journal of Development Economics, Elsevier, vol. 63(1), pages 5-44, October.
- Barry Eichengreen & Ashoka Mody, 1999. "Lending Booms, Reserves, and the Sustainability of Short-Term Debt: Inferences from the Pricing of Syndicated Bank Loans," NBER Working Papers 7113, National Bureau of Economic Research, Inc.
- Richard Cantor & Frank Packer, 1995. "Sovereign credit ratings," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 1(Jun).
When requesting a correction, please mention this item's handle: RePEc:bis:biswps:132. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Beslmeisl)
If references are entirely missing, you can add them using this form.