Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78051
Authors: 
Hallak, Issam
Year of Publication: 
2002
Series/Report no.: 
CFS Working Paper 2002/02
Abstract: 
All other terms being equal (e.g. seniority), syndicated loan contracts provide larger lending compensations (in percentage points) to institutions funding larger amounts. This paper explores empirically the motivation for such a price design on a sample of sovereign syndicated loans in the period 1990-1997. I find strong evidence that a larger premium is associated with higher renegotiation probability and information asymmetries. It hardly has any impact on the number of lenders though. This is consistent with the hypothesis that larger lenders act as main lenders, namely help reduce information asymmetries and provide services in situations of liquidity shortage. This constitutes new evidence of the existence of compensations for such unique services. Moreover, larger payment discrepancies are also associated with larger syndicated loan amounts. This provides further new evidence that larger borrowers bear additional borrowing costs.
Subjects: 
Relationship Lending
Number of Lenders
Syndicated Loans
Sovereign Debt
JEL: 
F34
G21
G33
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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