Development Banks and the Syndicate Structure: Evidence From a World Sample

53 Pages Posted: 24 Jun 2020 Last revised: 8 Feb 2022

See all articles by Marta Degl'Innocenti

Marta Degl'Innocenti

University of Southampton; University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Marco Frigerio

University of Milan; Department of Political and International Sciences, University of Siena

Si Zhou

Shanghai University

Date Written: January 25, 2022

Abstract

Do development banks influence the syndicate structure? Using a global dataset of 12,322 syndicated loans from 2001 to 2016 across 78 countries, we show that the lead banks decrease their loan shares and form less concentrated structure in mixed syndicates including both development banks and private-sector banks as participant lenders. In line with the social view on the role of development banks, we find that such an effect is stronger during periods of financial instability, particularly for the green industry and in the case of borrowers that are financially constrained. Conversely, we do not find any evidence that mixed syndicates exhibit a different syndicate structure for political distortions. Finally, we find that mixed syndicates are not associated with higher covenant violations and increasing of the borrowers’ risk profile after the loan origination. Our results are robust when accounting for relationship lending, asymmetric information within the syndicate, lenders’ lending expertise, borrowers’ opacity, types of loan, and ranking hierarchy in the syndicate among the others.

Keywords: Syndicated loan market, Syndicate structure, Development banks, Loan-level data

JEL Classification: D82, G21, G28

Suggested Citation

Degl'Innocenti, Marta and Degl'Innocenti, Marta and Frigerio, Marco and Zhou, Si, Development Banks and the Syndicate Structure: Evidence From a World Sample (January 25, 2022). Journal of Empirical Finance, Vol. 66, 2022, Available at SSRN: https://ssrn.com/abstract=3615477 or http://dx.doi.org/10.2139/ssrn.3615477

Marta Degl'Innocenti

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy

Marco Frigerio

University of Milan ( email )

Via Festa del Perdono 7
Milano, 20121
Italy

Department of Political and International Sciences, University of Siena ( email )

Banchi di Sotto, 55, 53100 Siena SI
Siena, Siena 53100
Italy

Si Zhou (Contact Author)

Shanghai University ( email )

Room 522, Building 1,
No. 99, Shangda Road, Baoshan District
Shanghai, 200444
China

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