Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153500
Authors: 
Ferreira, Miguel A.
Matos, Pedro
Year of Publication: 
2009
Series/Report no.: 
ECB Working Paper 1066
Abstract: 
Banks play a role in the corporate governance of firms as well as acting as debt financiers around the world. Universal banks can have control over borrowing firms by representation on the board of directors or by holding shares through direct stakes or institutional holdings. We investigate the effects of these bank-firm governance links on the global syndicated loan market. We find that banks are more likely to act as lead arrangers, charge higher interest rate spreads and face less credit risk after origination when they have some role in firm’s governance. This increase in interest rate spread is less pronounced for borrowers with access to international capital markets. Our results are robust to several methods to correct for the endogeneity of the bank-firm governance link. Our findings suggest that the benefits of bank involvement in firms’ governance accrue mostly to the banks.
Subjects: 
Corporate boards
Ownership
syndicated loans
Universal banking
JEL: 
G21
G32
Document Type: 
Working Paper

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