Staying Close to Home? Foreign Bank Participation in Syndicated Loans

18 Pages Posted: 20 May 2010

See all articles by Glenn Boyle

Glenn Boyle

University of Canterbury - Economics and Finance; Sapere Research Group

Roger D. Stover

Iowa State University - Department of Accounting and Finance

Date Written: May 18, 2010

Abstract

We examine the propensity of Australian banks to participate in syndicated loans to corporate borrowers from 12 countries in the Asia-Pacific region. As in other studies of international asset allocation, we find that these banks participate more often, and more intensively, in loans made to Australian firms. However, much of this apparent bias can be attributed to differences in familiarity characteristics – legal systems, banking presence and distance from Australia. As these characteristics are likely to proxy for information availability, our results provide further support for the view that home bias phenomena are primarily due to information problems. The latter also affect syndicate structure: the component of the bias due to information asymmetries is associated with lead banks retaining a greater percentage of the loan and with a smaller syndicate size.

Keywords: home bias, syndicated loans, Asia-Pacific

JEL Classification: G11, G15, G21

Suggested Citation

Boyle, Glenn and Stover, Roger D., Staying Close to Home? Foreign Bank Participation in Syndicated Loans (May 18, 2010). Available at SSRN: https://ssrn.com/abstract=1611901 or http://dx.doi.org/10.2139/ssrn.1611901

Glenn Boyle (Contact Author)

University of Canterbury - Economics and Finance ( email )

Private Bag 4800
Christchurch
New Zealand

Sapere Research Group ( email )

Level 9, Pencarrow House
1 Willeston St
Wellington, 6140
New Zealand

Roger D. Stover

Iowa State University - Department of Accounting and Finance ( email )

College of Business
Ames, IA 50011-2063
United States
515-294-8114 (Phone)

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