Duration of Syndication Process and Syndicate Organization
44 Pages Posted: 18 Apr 2010
Date Written: April 16, 2010
What is the influence of syndicate organization on the duration of a loan syndication process? We answer this question using the survival analysis methodology on a sample of loans to borrowers from 59 countries. We find that syndicate size, concentration, experience, reputation, and national diversity clearly matters for the duration of a syndication process and therefore for borrower satisfaction regarding the speed of obtaining the necessary funding.
A syndicate organization 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 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 and when his opacity is stronger.
Keywords: Syndicated loan, syndication process, syndicate organization, agency costs, experience, reputation, nationality, survival analysis
JEL Classification: F30, G15, G21, G32, C41
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