International Lending: The Role of Lender’s Home Country

The multinational syndicated loan market has crossed the $7 trillion threshold. Prior literature argues that weak borrower country’s creditor rights is the main limiting factor to cross-border lending. We find that lender country’s creditor rights can partly substitute for weak borrower creditor rights if a lender is from a better creditor rights country. Our results are robust to controlling for a borrower’s country laws, its foreign assets, the loan guarantees provided by its foreign parent, and its choice set of lenders.

(DealScan-WorldScope link table is available on https://wrds-www.wharton.upenn.edu/pages/get-data/linking-suite-wrds/dealscan-worldscope-link/ )

Keywords: International Finance, Multinational Loans, Cross-Border, Creditor Rights

JEL Classification: F34, G15, G33, O16

Suggested Citation: Suggested Citation

Beyhaghi, Mehdi and Dai, Rui and Saunders, Anthony and Wald, John K., International Lending: The Role of Lender’s Home Country (March 14, 2019). Journal of Money, Credit and Banking, Volume 53 Issue 6, Available at SSRN: https://ssrn.com/abstract=3168972 or http://dx.doi.org/10.2139/ssrn.3168972