Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119425
Authors: 
Year of Publication: 
2015
Series/Report no.: 
SFB 649 Discussion Paper No. 2015-012
Publisher: 
Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk, Berlin
Abstract: 
We analyze the impact of CDS trading on bank syndication activity. Theoretically, the effect of CDS trading is ambiguous: on the one hand, CDS can improve risksharing and hence be a more flexible risk management tool than loan syndication; on the other hand, CDS trading can reduce bank monitoring incentives. We document that banks are less likely to syndicate loans and retain a larger loan fraction once CDS are actively traded on the borrower's debt. We then discern the risk management and the moral hazard channel. We find no evidence that the reduced likelihood to syndicate loans is a result of increased moral hazard problems.
Subjects: 
Loan Sales
Credit Default Swaps
Syndicate Structure
Syndicated Loans
JEL: 
G21
G32
Document Type: 
Working Paper

Files in This Item:
File
Size
967.68 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.