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Asymmetric Information and Loan Spreads in Russia

Author

Listed:
  • Zuzana Fungáčová
  • Christophe J. Godlewski

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

  • Laurent Weill

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

Abstract

This paper considers whether local bank participation exerts an impact on the spread for syndicated loans in Russia. Following Berger et al. (2001), we test whether local banks possess superior ability to deal with information asymmetries. Using a sample of 528 syndicated loans to Russian borrowers, we perform regressions of the spread on a set of variables including information on local bank participation and the characteristics of loans and borrowers. Unlike earlier studies, ours distinguishes foreign banks with a local presence from those without such presence. The intuition here is that a local presence may influence a foreign bank's monitoring ability and access to information about borrowers. We observe no significant impact on the spread when there is local bank participation in a syndicated loan, nor do we find any significant influence of the presence of domestically owned banks or foreign-owned banks on the spread. Additional estimations considering subsamples with exacerbated information asymmetries provide similar results. Therefore, our conclusion is that local banks do not benefit from an advantage in monitoring ability and accessing information in Russia.
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Suggested Citation

  • Zuzana Fungáčová & Christophe J. Godlewski & Laurent Weill, 2011. "Asymmetric Information and Loan Spreads in Russia," Post-Print hal-03047766, HAL.
  • Handle: RePEc:hal:journl:hal-03047766
    DOI: 10.2753/EEE0012-8775490102
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    Cited by:

    1. Pessarossi, Pierre & Godlewski, Christophe J. & Weill, Laurent, 2012. "Foreign bank lending and information asymmetries in China: Empirical evidence from the syndicated loan market," Journal of Asian Economics, Elsevier, vol. 23(4), pages 423-433.
    2. repec:zbw:bofitp:2010_020 is not listed on IDEAS
    3. Christophe Godlewski & Zuzana Fungáčová & Laurent Weill, 2011. "Stock Market Reaction to Debt Financing Arrangements in Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 53(4), pages 679-693, December.
    4. Godlewski, Christophe J., 2014. "Bank loans and borrower value during the global financial crisis: Empirical evidence from France," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 28(C), pages 100-130.
    5. Pessarossi, Pierre & Godlewski, Christophe J. & Weill, Laurent, 2010. "Foreign bank lending and information asymmetries in China," BOFIT Discussion Papers 20/2010, Bank of Finland Institute for Emerging Economies (BOFIT).
    6. Christophe J. GODLEWSKI, 2012. "Are bank loans still “special” (especially during a crisis)? Empirical evidence from a European country," Working Papers of LaRGE Research Center 2012-03, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    7. repec:zbw:bofitp:2010_016 is not listed on IDEAS
    8. Pişkin, Fatih, 2016. "Türk Bankacılık Sektörü Tarafından Alınan Sendikasyon Kredilerinde Spreadi Belirleyen Faktörler [Determinants of Spread on Syndicated Loans To The Turkish Banking Sector]," MPRA Paper 87476, University Library of Munich, Germany.
    9. Pessarossi, Pierre & Godlewski, Christophe J. & Weill, Laurent, 2010. "Foreign bank lending and information asymmetries in China," BOFIT Discussion Papers 20/2010, Bank of Finland, Institute for Economies in Transition.
    10. Christophe Godlewski & Zuzana Fungáčová & Laurent Weill, 2011. "Stock Market Reaction to Debt Financing Arrangements in Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 53(4), pages 679-693, December.
    11. Fungachova, Z. & Solanko, L., 2010. "Has Banks’ Financial Intermediation Improved in Russia?," Journal of the New Economic Association, New Economic Association, issue 8, pages 101-116.

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