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Syndicated Loans in Emerging Markets

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  • Christophe J. Godlewski

    () (Laboratoire de Recherche en Gestion et Economie, Université Louis Pasteur)

  • Laurent Weill

Abstract

There has been a considerable expansion of the volume of syndicated loans in emerging markets in the recent years. We provide the first analysis of the determinants of the decision of banks to syndicate a loan on a sample of loan facilities from 50 emerging countries. We show the significant role of loan characteristics and of financial development, banking regulation, and legal institutions, on the decision to syndicate a loan. We support the efforts of authorities to increase banking competition and efficiency, and to implement binding banking regulation on capital requirement to promote the expansion of syndicated loans.

Suggested Citation

  • Christophe J. Godlewski & Laurent Weill, 2007. "Syndicated Loans in Emerging Markets," Working Papers of LaRGE Research Center 2007-03, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
  • Handle: RePEc:lar:wpaper:2007-03
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    References listed on IDEAS

    as
    1. Benjamin C. Esty, 2001. "Structuring Loan Syndicates: A Case Study Of The Hong Kong Disneyland Project Loan," Journal of Applied Corporate Finance, Morgan Stanley, vol. 14(3), pages 80-95.
    2. Yener Altunbas & Blaise Gadanecz, 2004. "Developing Country Economic Structure and the Pricing of Syndicated Credits," Journal of Development Studies, Taylor & Francis Journals, vol. 40(5), pages 143-173.
    3. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. " Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    4. Jimenez, Gabriel & Saurina, Jesus, 2004. "Collateral, type of lender and relationship banking as determinants of credit risk," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2191-2212, September.
    5. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
    6. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    7. Pennacchi, George G, 1988. " Loan Sales and the Cost of Bank Capital," Journal of Finance, American Finance Association, vol. 43(2), pages 375-396, June.
    8. Gregory P. Nini, 2004. "The value of financial intermediaries: empirical evidence from syndicated loans to emerging market borrowers," International Finance Discussion Papers 820, Board of Governors of the Federal Reserve System (U.S.).
    9. Dennis, Steven A. & Mullineaux, Donald J., 2000. "Syndicated Loans," Journal of Financial Intermediation, Elsevier, vol. 9(4), pages 404-426, October.
    10. Linda Allen & Aron Gottesman, 2006. "The Informational Efficiency of the Equity Market As Compared to the Syndicated Bank Loan Market," Journal of Financial Services Research, Springer;Western Finance Association, vol. 30(1), pages 5-42, August.
    11. repec:hrv:faseco:30728041 is not listed on IDEAS
    12. Sang Whi Lee & Donald J. Mullineaux, 2004. "Monitoring, Financial Distress, and the Structure of Commercial Lending Syndicates," Financial Management, Financial Management Association, vol. 33(3), Fall.
    13. 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(01), pages 37-60, March.
    14. Berger, Allen N. & Udell, Gregory F., 1990. "Collateral, loan quality and bank risk," Journal of Monetary Economics, Elsevier, vol. 25(1), pages 21-42, January.
    15. Rajan, Raghuram & Winton, Andrew, 1995. " Covenants and Collateral as Incentives to Monitor," Journal of Finance, American Finance Association, vol. 50(4), pages 1113-1146, September.
    16. Pegaret Pichler & William Wilhelm, 2001. "A Theory of the Syndicate: Form Follows Function," OFRC Working Papers Series 2001fe05, Oxford Financial Research Centre.
    17. Pegaret Pichler, 2001. "A Theory of the Syndicate: Form Follows Function," Journal of Finance, American Finance Association, vol. 56(6), pages 2237-2264, December.
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    Citations

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    Cited by:

    1. Karima Bouaiss & Catherine Refait-Alexandre, 2009. "La structure des crédits syndiqués comme défense contre les problèmes informationnels - Une analyse empirique sur le marché français," Revue Finance Contrôle Stratégie, revues.org, vol. 12(2), pages 35-68, June.
    2. Paulo Bastos & Nicolas L. Bottan & Julian Cristia, 2017. "Access to Preprimary Education and Progression in Primary School: Evidence from Rural Guatemala," Economic Development and Cultural Change, University of Chicago Press, pages 521-547.
    3. Godlewski, Christophe, 2008. "Duration of loan arrangement and syndicate organization," MPRA Paper 10953, University Library of Munich, Germany.
    4. Fungáčová, Zuzana & Godlewski, Christophe J. & Weill, Laurent, 2009. "Asymmetric information and loan spreads in Russia : evidence from syndicated loans," BOFIT Discussion Papers 7/2009, Bank of Finland, Institute for Economies in Transition.
    5. Laurent Weill & Christophe Godlewski, 2012. "Why Do Large Firms Go For Islamic Loans?," Working Papers of LaRGE Research Center 2012-05, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    6. Pessarossi, Pierre & Godlewski, Christophe J. & Weill, Laurent, 2012. "Foreign bank lending and information asymmetries in China: Empirical evidence from the syndicated loan market," Journal of Asian Economics, Elsevier, vol. 23(4), pages 423-433.
    7. Cerutti, Eugenio & Hale, Galina & Minoiu, Camelia, 2015. "Financial crises and the composition of cross-border lending," Journal of International Money and Finance, Elsevier, vol. 52(C), pages 60-81.
    8. Guglielmo Maria Caporale & Suman Lodh & Monomita Nandy, 2015. "How Has the Global Financial Crisis Affected Syndicated Loan Terms in Emerging Markets? Evidence from China," CESifo Working Paper Series 5353, CESifo Group Munich.
    9. Christodoulakis, George A. & Olupeka, Taiwo, 2010. "Pricing and momentum of syndicated credit in Europe," Omega, Elsevier, vol. 38(5), pages 325-332, October.
    10. 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).
    11. Pessarossi, Pierre & Godlewski, Christophe J. & Weill, Laurent, 2010. "Foreign bank lending and information asymmetries in China," BOFIT Discussion Papers 20/2010, Bank of Finland, Institute for Economies in Transition.
    12. Korkeamäki, Timo & Pöyry, Salla & Suo, Maiju, 2014. "Credit ratings and information asymmetry on the Chinese syndicated loan market," China Economic Review, Elsevier, vol. 31(C), pages 1-16.
    13. repec:eee:intfin:v:52:y:2018:i:c:p:211-226 is not listed on IDEAS

    More about this item

    Keywords

    Bank; Loan; Syndication; Emerging Markets; Logit Regressions.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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