Syndicated Loan Market and Banks' Distant Lending

58 Pages Posted: 22 Dec 2021

See all articles by Jack Glaser

Jack Glaser

University of Chicago

João A. C. Santos

Federal Reserve Bank of New York; Nova School of Business and Economics

Date Written: December 22, 2021


Banks in the syndicated loan market have increased their distant lending over the last three decades. Lead banks play a role in participant banks' distant lending decisions but not in a way entirely consistent with them acting as “delegated” monitors. This is partly because participant banks rely extensively on their lending experience: they make larger investments in loans to distant borrowers (including those that are more informationally opaque) in industries they have a large lending experience. Lending experience is relatively more important when participant banks lend to distant borrowers that are informationally opaque and the lead bank retains a small loan share, suggesting some substitutability between participants' lending experience and the lead bank's loan share. Another implication of our findings, which we confirm, is that participant banks do not lend farther away from them to diversify risk beyond geographic diversification.

Keywords: Loan syndicates, lead banks, participant banks, distant lending

JEL Classification: G21, G32

Suggested Citation

Glaser, Jack and Santos, João A. C., Syndicated Loan Market and Banks' Distant Lending (December 22, 2021). Available at SSRN: or

Jack Glaser

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

João A. C. Santos (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-5583 (Phone)
212-720-8363 (Fax)


Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405

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