Abstract

http://ssrn.com/abstract=1434502
 
 

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Syndicated Loans, Foreign Banking and Capital Market Development


Rainer F. H. Haselmann


University of Bonn

Paul Wachtel


New York University - Stern School of Business

January 31, 2009


Abstract:     
In this paper we examine the role of syndicated loan markets in financial market development in 24 European countries. We find credit spreads to be negatively related to market size in small markets and positively related in large financial markets. Syndicated loans play a different role in large versus small financial systems. In small markets, loan syndications are a substitute for missing public debt markets, while in large financial markets loan syndicates enable arrangers to spread risk more efficiently. Foreign banks tend to reinforce this effect. In small markets, they transfer external finance across borders and in large markets they tend to take on more risky projects. Consequently, we find that characteristics of loan contracts arranged by foreign banks in small versus large markets differ considerably.

Number of Pages in PDF File: 24

JEL Classification: F36, G15, G21, P34

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Date posted: July 16, 2009  

Suggested Citation

Haselmann, Rainer F. H. and Wachtel, Paul, Syndicated Loans, Foreign Banking and Capital Market Development (January 31, 2009). Available at SSRN: http://ssrn.com/abstract=1434502 or http://dx.doi.org/10.2139/ssrn.1434502

Contact Information

Rainer F. H. Haselmann
University of Bonn ( email )
Germany
Paul Wachtel (Contact Author)
New York University - Stern School of Business ( email )
44 West 4th St.
New York, NY 10012
United States
212-998-4030 (Phone)
212-995-4218 (Fax)
HOME PAGE: http://www.stern.nyu.edu/~pwachtel
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