International Lending: The Role of Lender’s Home Country
Journal of Money, Credit and Banking, Volume 53 Issue 6
66 Pages Posted: 10 May 2018 Last revised: 24 Aug 2021
Date Written: March 14, 2019
Abstract
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