Bank Board Structure and Loan Syndication

57 Pages Posted: 8 Jun 2021

See all articles by Lindsay Baran

Lindsay Baran

Kent State University

Steven Dennis

University of North Dakota

Maneesh Shukla

Kent State University

Date Written: June 2021

Abstract

We study the impact of bank board structure on loan syndication and find both monitoring quality and connections of the lead bank’s board have a positive effect on three measures of the ability to syndicate a larger portion of a loan. Board monitoring quality plays a more dominant role during the financial crisis and following a negative reputation shock to the lead arranger. Board member connectedness is dominant for lower reputation lead arrangers. Our results are robust to an instrumental variable approach for endogeneity. Overall, we conclude that lead arranger board quality serves as a credible signal to participant banks.

Keywords: Bank board of directors, loan syndication, agency conflict

JEL Classification: G21, G34

Suggested Citation

Baran, Lindsay and Dennis, Steven and Shukla, Maneesh, Bank Board Structure and Loan Syndication (June 2021). Available at SSRN: https://ssrn.com/abstract=3860110 or http://dx.doi.org/10.2139/ssrn.3860110

Lindsay Baran (Contact Author)

Kent State University ( email )

College of Business Administration
P.O. Box 5190
Kent, OH 44242-0001
United States

Steven Dennis

University of North Dakota ( email )

Box 8366
Grand Forks, ND 58202
United States

Maneesh Shukla

Kent State University ( email )

College of Business Administration
P.O. Box 5190
Kent, OH 44242-0001
United States

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