Duration of loan arrangement and syndicate organization

Godlewski, Christophe (2008): Duration of loan arrangement and syndicate organization.

Abstract

What is the influence of syndicate organization on the duration of loan arrangement? I answer this question using the survival analysis methodology on a sample of loans from 59 countries over the 1992-2006 period. I find that syndicate size, concentration, reputation, and national diversity clearly matters for the duration of loan arrangement and therefore for borrower satisfaction regarding the speed of obtaining the necessary funding. A syndicate organization adapted to specific agency problems of syndication, with numerous, reputable, and experienced arrangers retaining a larger portion of the loan reduces the duration. The latter is also shorter when the lenders diversity in terms of nationality is weaker.

• Item Type: MPRA Paper
• Language: English
• Keywords: Syndicated loan, syndication process, duration of loan arrangement, agency costs, reputation, experience, nationality, survival analysis
• Subjects: F - International Economics > F3 - International Finance > F30 - General; C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C41 - Duration Analysis ; Optimal Timing Strategies; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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