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Loan Syndication and Credit Cycles

11 Pages Posted: 20 Jan 2010  

Victoria Ivashina

Harvard University; National Bureau of Economic Research (NBER)

David S. Scharfstein

Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Date Written: January 18, 2010

Abstract

Cyclicality in the supply of business credit has been the focus of a considerable amount of research. This cyclicality can stem from shocks to borrowers’ collateral, which affect firms’ ability to raise capital if agency and information problems are significant (Ben S. Bernanke and Mark Gertler, 1989). Or it can stem from shocks to bank capital, which affects the supply of bank loans if agency and information problems limit the ability of banks to raise additional capital (Bernanke, 1983). In this paper, we examine cyclicality in the supply of credit in the context of modern forms of banking, often referred to as the “originate-to-distribute” model. In particular, we focus on the role of syndicated lending.

Keywords: Banks, Credit, Syndicated loans

JEL Classification: E4, E5, G2

Suggested Citation

Ivashina, Victoria and Scharfstein, David S., Loan Syndication and Credit Cycles (January 18, 2010). American Economic Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1538892

Victoria Ivashina (Contact Author)

Harvard University ( email )

Harvard Business School
Baker Library 233
Boston, MA 02163
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David S. Scharfstein

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-496-5067 (Phone)
617-496-8443 (Fax)

HOME PAGE: http://www.people.hbs.edu/dscharfstein/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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