Determinants of Multiple Bank Loan Renegotiations in Europe

38 Pages Posted: 19 Nov 2013

See all articles by Christophe J. Godlewski

Christophe J. Godlewski

University of Strasbourg - Faculty of Law and Business; EM Strasbourg Business School; LaRGE Research Center

Date Written: November 18, 2013

Abstract

This article provides empirical evidence on the determinants of multiple bank loan renegotiations in Europe over the last decade. I find that renegotiations differ from those in US in terms of frequency, amended terms, and first occurrence. Multiple renegotiations concern very large loans which are funded by large pools of lenders with fewer lead banks. Borrower transparency and amendment characteristics halt the number of renegotiation rounds while the credit crisis of 2008 has the opposite effect. Financial development, banking structure and creditor rights also influence the renegotiation process. Overall, the renegotiation process adapts to informational frictions in the borrower-lender relationship.

Keywords: debt renegotiation, financial contracts, bank loans, Europe

JEL Classification: G14, G20

Suggested Citation

Godlewski, Christophe J., Determinants of Multiple Bank Loan Renegotiations in Europe (November 18, 2013). Available at SSRN: https://ssrn.com/abstract=2356222 or http://dx.doi.org/10.2139/ssrn.2356222

Christophe J. Godlewski (Contact Author)

University of Strasbourg - Faculty of Law and Business ( email )

1 place d'Athènes
Strasbourg, 67000
France

HOME PAGE: http://droit.unistra.fr/

EM Strasbourg Business School ( email )

61 Avenue de la Forêt Noire
Strasbourg, 67000
France

HOME PAGE: http://www.em-strasbourg.eu/

LaRGE Research Center ( email )

1 place d'Athènes
Strasbourg, 67000
France

HOME PAGE: http://droit.unistra.fr/

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