How to Get a Syndicated Loan Fast? The Role of Syndicate Composition and Organization
32 Pages Posted: 29 Jul 2009
Date Written: July 29, 2009
We empirically investigate the organizational determinants of the speed of a loan syndication process, with a particular focus on the influence of syndicate composition and organization. Indeed, the major advantage of syndicated lending is the speed with which the required funding can be obtained, while syndication composition and organization are considered as crucial for successful syndication. In a cross-country framework, we find that syndicate composition and organization characteristics clearly matter for the duration of the syndication process and therefore for borrower satisfaction in terms of the speed of obtaining the necessary funding. In particular, a syndicate composition and organization adapted to the specific agency problems of syndication, with numerous, reputable and experienced arrangers holding a larger portion of the loan and with more lenders from the same country as the borrower reduces the duration.
Keywords: Syndicated loan, syndication process, syndicate composition and organization, survival analysis
JEL Classification: C41, F30, G15, G21, G32
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