Duration of Syndication Process and Syndicate Organization
37 Pages Posted: 16 Feb 2009
Date Written: December 2008
What influence does syndicate organization have on the duration of the loan syndication process? We answer this question using survival analysis methodology on a sample of more than 4,800 loans to borrowers from 59 countries. We find that syndicate size, concentration, experience, reputation, and national diversity clearly matter for the duration of the syndication process and therefore for borrower satisfaction in terms of the speed of obtaining the necessary funding. A syndicate organization adapted to the specific agency problems of syndication, with numerous, reputable and experienced arrangers holding a larger portion of the loan reduces the duration. The latter is also shorter when more lenders come from the same country as the borrower. These effects are more pronounced when the borrower has a low reputation on the syndicated lending market or is more opaque.
Keywords: Syndicated loan, syndication process, syndicate organization, agency costs, experience, reputation, nationality, survival analysis
JEL Classification: F30, G15, G21, G32, C41
Suggested Citation: Suggested Citation