Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110186
Authors: 
Grupp, Marcel
Year of Publication: 
2015
Series/Report no.: 
SAFE Working Paper Series 100
Abstract: 
In the mid-1990s, institutional investors entered the syndicated loan market and started to serve borrowers as lead arrangers. Why are non-banks able to compete for this role against banks? How do the composition of syndicates and loan pricing differ among lead arrangers? By using a dataset of 12,847 leveraged loans between 1997 and 2012, I aim to answer these questions. Non-banks benefit from looser regulatory requirements, have industry expertise which helps them in the screening and monitoring of borrowers and focus on firms that ask for loans only instead of additional cross-selling of other services. I can show that non-banks specialize on more opaque and less experienced borrowers, are more likely than banks to choose participants that help to reduce potentially higher information asymmetries and earn 105 basis points more than banks.
Subjects: 
non-bank lead arrangers
syndicated loans
spread premium
JEL: 
G21
G23
G32
Document Type: 
Working Paper

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