Department
Economics, Finance and Quantitative Analysis
Document Type
Article
Publication Date
8-2018
Embargo Period
7-17-2020
Abstract
Using a sample of syndicated loans to private equity (PE)-backed IPO companies, we examine how a third-party bank relationship influences the syndicate structure of a loan. We find that a stronger relationship between the lead bank and the borrower’s PE firm enables the lead bank to retain a smaller share of the loan and form a larger and less concentrated syndicate, especially when the borrower is less transparent. A stronger PE-bank relationship also attracts greater foreign bank participation. Our findings suggest that the lead bank’s relationship with a large equity holder of the borrower facilitates information production in lending.
Journal Title
The Financial Review
Journal ISSN
0732-8516
Volume
53
Issue
3
Comments
Preprint available 2 years from publication.
Can be found here: https://financialreview.poole.ncsu.edu/wp-content/uploads/2017/07/53_1_2.pdf