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Bank competition and the design of syndicated loans

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  • Chongyang Chen
  • Robert Kieschnick

Abstract

We study the effect of bank competition on the design of syndicate loans. We find that competition in the lead lender's market plays a significant role in determining the terms of the syndicate loans. Specifically, higher concentration leads to higher yield spreads, larger issues, shorter maturities, greater contract intensity, and more collateral requirements, but with a greater likelihood of performance pricing. We also find the prior banking relationships, anti‐takeover provisions and whether the lead bank is a national, regional, or state bank influence the designs of these loans.

Suggested Citation

  • Chongyang Chen & Robert Kieschnick, 2024. "Bank competition and the design of syndicated loans," The Financial Review, Eastern Finance Association, vol. 59(1), pages 227-251, February.
    • Handle: RePEc:bla:finrev:v:59:y:2024:i:1:p:227-251
    DOI: 10.1111/fire.12359
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