The Agency Structure of Loan Syndicates

19 Pages Posted: 4 Jun 2007

See all articles by Franck Missonier-Piera

Franck Missonier-Piera

University of Geneva - Graduate School of Business (HEC-Geneva); University of Geneva (HEC-Geneva)

Pascal Francois

HEC Montreal - Department of Finance

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Abstract

Leaders of loan syndicates often delegate some administrative tasks to banks known as co-agents. One reason is that co-agents are specialized banks that help split the costs of managing the syndicate. Another reason is that co-agents monitor the leader on behalf of syndicate members to mitigate informational asymmetry problems. Large sample tests on the Dealscan database provide support for both arguments. Evidence of repeated contracting between the same banks explains the moderate magnitude of monitoring effects.

Suggested Citation

Missonier-Piera, Franck and Francois, Pascal, The Agency Structure of Loan Syndicates. Financial Review, Vol. 42, No. 2, pp. 227-245, May 2007, Available at SSRN: https://ssrn.com/abstract=990904 or http://dx.doi.org/10.1111/j.1540-6288.2007.00169.x

Franck Missonier-Piera

University of Geneva - Graduate School of Business (HEC-Geneva) ( email )

40 bd Du Pont d'Arve
Geneva, 1211
Switzerland

University of Geneva (HEC-Geneva) ( email )

40 bd Du Pont d'Arve
Geneva, 1211
Switzerland

Pascal Francois (Contact Author)

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-7743 (Phone)
514-340-5632 (Fax)

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