Private Debt Renegotiation and Financial Institutions’ Network

47 Pages Posted: 2 Mar 2020

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

Bulat Sanditov

Maastricht University

Date Written: January 1, 2020

Abstract

We study the influence of financial institutions’ network on private debt renegotiation outside of distress. Lenders with a network-central position have access to superior private information, are more experienced and trustworthy and have a greater reputational capital. Using a large sample of more than 10.000 loans issued in 25 European countries we find that network-central lenders have a significant influence on the renegotiation process. Such lenders increase the likelihood of renegotiation, the number of renegotiation rounds, and the number of amendments to the loan agreement. Our findings survive multiple robustness checks and confirm that access to superior information, greater experience, reputation, and trust encourages private debt renegotiation.

Keywords: financial contracts, bank loan, renegotiation, syndicated lending, social network analysis, lender network, lender centrality

JEL Classification: G21, G24, G32, G34

Suggested Citation

Godlewski, Christophe J. and Sanditov, Bulat, Private Debt Renegotiation and Financial Institutions’ Network (January 1, 2020). Available at SSRN: https://ssrn.com/abstract=3530002 or http://dx.doi.org/10.2139/ssrn.3530002

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/

Bulat Sanditov

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

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