Lending Relationships and the Pricing of Syndicated Loans

• 成果类型: Article
• 署名作者: Zhang, Donghang; Zhang, Yafei; Zhao, Yijia (Eddie)
• 署名单位: University of South Carolina System; University of South Carolina Columbia; University of Manchester; Alliance Manchester Business School; University of Massachusetts System; University of Massachusetts Boston
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4730
• 发表日期: 2024
• 关键词: syndicated loan; lending relationship; primary market; loan underwriting; originate to distribute (OTD)

摘要

Using a dataset on syndicated loan primary market pricing adjustments, we examine whether relationship banks' information advantage facilitates price discovery in loan issuances. We find that the lead bank makes fewer adjustments to the initial pricing terms of a syndicated loan and shortens the syndication time when it has a stronger relationship with the borrower. A stronger relationship also reduces loan underpricing. A relationship lead bank relies less on information from syndicate members. Exogenous shocks to relationships caused by bank mergers and closures confirm our findings. We contribute to the literature by showing that relationship lending improves loan pricing efficiency.