Participants' Reputation in the Syndicated Lending Market

56 Pages Posted: 13 Nov 2018 Last revised: 9 Jan 2019

See all articles by Daria Kalyaeva

Daria Kalyaeva

Swiss Finance Institute; University of Lausanne

Date Written: October 22, 2018

Abstract

How do lenders use their reputation when participating in syndicated loans? I address this question by focusing on syndicate composition with respect to participants’ reputation and its impact on loan spreads. I find that lender reputation enables it to compete in terms of choosing the types of loans to be involved in, so more reputable lenders participate in loans to safer, more transparent, and larger borrowers. In general, more reputable lenders participate in loans with more market finance features, rather than bank finance. However I find no evidence that lenders use their reputation and the corresponding market power for direct price competition. Any significant price effects of participants’ reputation seem to aid the certification process, rather than exploit their market power.

Keywords: Syndicated lending, reputation, participants, contract terms, participation, certification

JEL Classification: G10, G11, G21, L11, L14, L84

Suggested Citation

Kalyaeva, Daria, Participants' Reputation in the Syndicated Lending Market (October 22, 2018). Swiss Finance Institute Research Paper No. 18-77, Available at SSRN: https://ssrn.com/abstract=3270820 or http://dx.doi.org/10.2139/ssrn.3270820

Daria Kalyaeva (Contact Author)

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

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