The Role of Networks in Loan Syndicate Markets

• 成果类型: Article; Early Access
• 署名作者: Harris, Jeffrey H.; Spyridopoulos, Ioannis; Zekhnini, Morad; Brunetti, Celso
• 署名单位: American University; Michigan State University; Michigan State University's Broad College of Business; Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.06313
• 发表日期: 2025
• 关键词: banking networks; syndicate structure; loan prices; syndication risk; RELATIONSHIP BANKING; BANK MERGERS

摘要

Several large, well-connected banks jointly underwrite the vast majority of syndicated loans. Although syndication reduces risk by spreading large loans across multiple banks and may benefit borrowers, the process may also facilitate collusive pricing. Disentangling these two effects requires a network view of loan syndicates as traditional measures of market concentration do not capture the collaborative nature of syndication. We find that well-connected banks offer 5-to 15-basis-point-lower loan rates. Well-connected lenders leverage their network position to structure larger, more dispersed syndicates with fewer coarrangers, allowing them to earn higher fee income and reduce their loan risk exposure. We address potential selection biases by exploiting the stickiness in firm-bank relationships and the transfer of credit relationships around forced mergers during the 2007-2009 financial crisis. Using new supervisory data on borrowers' loan repayment and on-site inspections, we find little evidence that connectedness is related to superior monitoring or performance. Our findings suggest that connectivity is instrumental in lowering loan prices rather than facilitating collusive pricing.