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Banking Relationships and Syndicated Loans during the 2008 Financial Crisis

Author

Listed:
  • Herve Alexandre

    () (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)

  • Karima Bouaiss

    () (CERMAT - Centre d'Études et de Recherche en MAnagement de Touraine - Institut d'Administration des Entreprises (IAE) - Tours)

  • Catherine Refait-Alexandre

    () (CRESE - Centre de REcherches sur les Stratégies Economiques (EA 3190) - UBFC - Université Bourgogne Franche-Comté [COMUE] - UFC - Université de Franche-Comté)

Abstract

The research shows that banking relationships are important to lending. However, few studies focus on the banking relationships in syndicated loans, although these loans have became a major source of financing. The last financial crisis clearly shows the impacts of credit rationing and tightening credit conditions, even in the syndicated loans market. We investigate whether banking relationships help firms to benefit from better terms for syndicated loans in a chaotic financial environment. Using a sample of syndicated loans arranged from 2003 to 2008 in North America and Europe, we find that firms with a previously developed relationship with a lead bank obtained a lower spread and a longer maturity during the financial crisis but did not benefit from larger loan facilities.

Suggested Citation

  • Herve Alexandre & Karima Bouaiss & Catherine Refait-Alexandre, 2014. "Banking Relationships and Syndicated Loans during the 2008 Financial Crisis," Post-Print halshs-01067252, HAL.
    • Handle: RePEc:hal:journl:halshs-01067252
    DOI: 10.1007/s10693-013-0172-4
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01067252
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    References listed on IDEAS

    as
    1. Giannetti, Mariassunta & Laeven, Luc, 2012. "The flight home effect: Evidence from the syndicated loan market during financial crises," Journal of Financial Economics, Elsevier, vol. 104(1), pages 23-43.
    2. Wenying Jiangli & Haluk Unal & Chiwon Yom, 2008. "Relationship Lending, Accounting Disclosure, and Credit Availability during the Asian Financial Crisis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(1), pages 25-55, February.
    3. Brick, Ivan E. & Palia, Darius, 2007. "Evidence of jointness in the terms of relationship lending," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 452-476, July.
    4. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    5. Esty, Benjamin C. & Megginson, William L., 2003. "Creditor Rights, Enforcement, and Debt Ownership Structure: Evidence from the Global Syndicated Loan Market," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(1), pages 37-60, March.
    6. Mark Carey & Greg Nini, 2007. "Is the Corporate Loan Market Globally Integrated? A Pricing Puzzle," Journal of Finance, American Finance Association, vol. 62(6), pages 2969-3007, December.
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    10. Maskara, Pankaj Kumar, 2010. "Economic value in tranching of syndicated loans," Journal of Banking & Finance, Elsevier, vol. 34(5), pages 946-955, May.
    11. Ralph De Haas & Neeltje Van Horen, 2013. "Running for the Exit? International Bank Lending During a Financial Crisis," Review of Financial Studies, Society for Financial Studies, vol. 26(1), pages 244-285.
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    Cited by:

    1. Chala, Alemu Tulu, 2018. "Syndicated Lending: The Role of Relationships for the Retained Share," Working Papers 2018:34, Lund University, Department of Economics.
    2. Guglielmo Maria Caporale & Suman Lodh & Monomita Nandy, 2018. "How has the global financial crisis affected syndicated loan terms in emerging markets? Evidence from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 23(4), pages 478-491, October.
    3. Fang, Heyang & Zhang, Yifei, 2019. "Political Tensions and Corporate Cross-border Financing: Evidence from the China-U.S. Trade War," MPRA Paper 95494, University Library of Munich, Germany.

    More about this item

    Keywords

    Syndication Loans Banking relationship Financialcrisis;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • 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

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