Duration of Loan Arrangement and Syndicate Structure
39 Pages Posted: 28 Jun 2008
Date Written: June 27, 2008
What is the influence of syndicate structure on the duration of loan arrangement? I answer this question using survival analysis methodology on a sample of loans from 59 countries over the 1992-2006 period. I find that syndicate size, concentration, reputation, and national diversity clearly matters for the duration of loan arrangement. A syndicate structure adapted to specific agency problems of syndication, with numerous, reputable, and experienced arrangers retaining a larger portion of the loan reduces the duration. The latter is also reduced when the syndicate has numerous lenders acting as syndicate "managers'' from the same country as the borrower. Furthermore, more same-country "managers" and participants allow to shorten the duration of loan arrangement.
Keywords: Syndicated loan, syndication process, duration of loan arrangement, agency costs, reputation, experience, nationality, survival analysis
JEL Classification: F30, G15, G21, G32, C41
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