TY - JOUR
T1 - Are syndicated loans truly less expensive?
AU - Cortés, Janko Hernández
AU - Tribó, Josep A.
AU - Adamuz, María de las Mercedes
N1 - Publisher Copyright:
© 2020 Elsevier B.V.
PY - 2020/11
Y1 - 2020/11
N2 - In this paper, we empirically examine the spreads of syndicated and non-syndicated loans. We compare the spreads from tranches belonging to both types of contracts across deals of similar sizes. Our study of large corporate loans in the US market for the period from 1990 to 2013 shows that the differential between syndicated and non-syndicated spreads is, on average, 19.23 basis points. Moreover, for small and medium loans, the differences are 39.3 and 21.89 basis points, respectively. We use different methodologies and time periods and address endogeneity concerns on the decision of syndication to provide robust empirical evidence that, contrary to some previous studies, syndicated loans are not less expensive than non-syndicated loans and in most cases are significantly more expensive, particularly for small loans.
AB - In this paper, we empirically examine the spreads of syndicated and non-syndicated loans. We compare the spreads from tranches belonging to both types of contracts across deals of similar sizes. Our study of large corporate loans in the US market for the period from 1990 to 2013 shows that the differential between syndicated and non-syndicated spreads is, on average, 19.23 basis points. Moreover, for small and medium loans, the differences are 39.3 and 21.89 basis points, respectively. We use different methodologies and time periods and address endogeneity concerns on the decision of syndication to provide robust empirical evidence that, contrary to some previous studies, syndicated loans are not less expensive than non-syndicated loans and in most cases are significantly more expensive, particularly for small loans.
KW - Loan spreads
KW - Syndicated loans
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U2 - 10.1016/j.jbankfin.2020.105942
DO - 10.1016/j.jbankfin.2020.105942
M3 - Article
AN - SCOPUS:85090359151
SN - 0378-4266
VL - 120
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
M1 - 105942
ER -