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The determinants of multiple bank loan renegotiations in Europe

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  • Christophe J. Godlewski

    (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg)

Abstract

This article provides empirical evidence on the determinants of multiple bank loan renegotiations in Europe over the last decade. It finds that renegotiations differ from those in the US in terms of frequency, amended terms, and first occurrence. Multiple renegotiations concern very large loans, which are funded by large pools of lenders with fewer lead banks. Borrower transparency and amendment characteristics halt the number of renegotiation rounds, while the credit crisis of 2008 has had the opposite effect. Financial development, banking structure, and creditor rights also influence the renegotiation process. Overall, the renegotiation process adapts to informational frictions in the borrower–lender relationship.
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Suggested Citation

  • Christophe J. Godlewski, 2014. "The determinants of multiple bank loan renegotiations in Europe," Post-Print hal-03047758, HAL.
    • Handle: RePEc:hal:journl:hal-03047758
    DOI: 10.1016/j.irfa.2014.07.005
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    5. Duran, Miguel A., 2022. "The risk–return relation in the corporate loan market," The North American Journal of Economics and Finance, Elsevier, vol. 60(C).
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    10. Christophe J. GODLEWSKI, 2017. "Initial conditions and the private debt renegotiation process," Working Papers of LaRGE Research Center 2017-03, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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