Loan Syndication Participation by Investment Banks and Nonbank Financial Entities

25 Pages Posted: 14 Apr 2019

See all articles by Pankaj K. Maskara

Pankaj K. Maskara

Eastern Kentucky University - Accounting, Finance, & Information Systems; Nova Southeastern University

Donald J. Mullineaux

University of Kentucky - Gatton College of Business and Economics

Date Written: March 22, 2006

Abstract

We analyze participation by investment banks and other nonbank lenders in syndicated loan financings. We find that investment banks are more likely than commercial banks to lead syndicates to riskier borrowers and they participate more often than commercial banks in the riskier tranches of multi-facility loans. Though non-bank entities such as insurance companies and mutual funds rarely play lead roles in syndications, they also participate more frequently in riskier, multi-facility syndicated credits. Maskara (2010) argues that multi-facility syndicated loans derive economic value from the participation of lender groups with varying levels of risk aversion. We find empirical support for his theoretical arguments.

Keywords: Tranching, Syndicated Loans, Investment Banks

JEL Classification: G21

Suggested Citation

Maskara, Pankaj K. and Mullineaux, Donald J., Loan Syndication Participation by Investment Banks and Nonbank Financial Entities (March 22, 2006). Available at SSRN: https://ssrn.com/abstract=3354840 or http://dx.doi.org/10.2139/ssrn.3354840

Pankaj K. Maskara (Contact Author)

Eastern Kentucky University - Accounting, Finance, & Information Systems ( email )

United States

Nova Southeastern University ( email )

3301 College Avenue
Ft. Lauderdale, FL 33314
United States

Donald J. Mullineaux

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States
859-257-2890 (Phone)
859-257-9688 (Fax)

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