Abstract

https://ssrn.com/abstract=2361066
 


 



Mind the Gap: The Difference between U.S. and European Loan Rates


Tobias Berg


Frankfurt School of Finance & Management

Anthony Saunders


New York University - Leonard N. Stern School of Business

Sascha Steffen


University of Mannheim - Business School; Centre for European Economic Research (ZEW)

Daniel Streitz


E.CA Economics

July 12, 2016


Abstract:     
We analyze pricing differences between U.S. and European syndicated loans over the 1992-2014 period. We explicitly distinguish credit lines from term loans. For credit lines, U.S. borrowers pay significantly higher spreads, but lower fees, resulting in similar total costs of borrowing in both markets. Credit line usage is more cyclical in the U.S., which provides a rationale for the pricing structure difference. For term loans, we analyze the channels of the cross-country loan price differential and document the importance of: the composition of term loan borrowers and the loan supply by institutional investors and foreign banks.

Number of Pages in PDF File: 55

Keywords: Loans, corporate debt, fees, market integration, globalization

JEL Classification: G30, G20, G15


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Date posted: November 30, 2013 ; Last revised: July 15, 2016

Suggested Citation

Berg, Tobias and Saunders, Anthony and Steffen, Sascha and Streitz, Daniel, Mind the Gap: The Difference between U.S. and European Loan Rates (July 12, 2016). Available at SSRN: https://ssrn.com/abstract=2361066 or http://dx.doi.org/10.2139/ssrn.2361066

Contact Information

Tobias Berg
Frankfurt School of Finance & Management ( email )
Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany
Anthony Saunders
New York University - Leonard N. Stern School of Business ( email )
44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)
Sascha Steffen
University of Mannheim - Business School ( email )
L9, 1-2
Mannheim, 68131
Germany
HOME PAGE: http://www.sascha-steffen.de
Centre for European Economic Research (ZEW) ( email )
L7, 1
Mannheim, 68161
Germany
+496211235140 (Phone)
Daniel Streitz (Contact Author)
E.CA Economics ( email )
Schlossplatz 1
Berlin, 10178
Germany
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