Are syndicated loans truly less expensive?

Janko Hernández Cortés, Josep A. Tribó, María de las Mercedes Adamuz

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

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.

Original languageEnglish
Article number105942
JournalJournal of Banking and Finance
Volume120
DOIs
StatePublished - Nov 2020

Keywords

  • Loan spreads
  • Syndicated loans

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