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Bank loan renegotiation and financial institutions' network

Author

Listed:
  • Christophe Godlewski

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

  • Bulat Sanditov

    (IMT-BS - DEFI - Département Droit, Economie et Finances - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris])

Abstract

We investigate how lender's capacity of sourcing information about a borrower, proxied by its centrality in the networks of syndicated lending, influences the process of bank loan renegotiation. Using a large sample of more than 6000 loans issued in 25 European countries we find that the presence of network-central and better-informed lenders in a syndicate has a significant impact on the renegotiation process, increasing the likelihood of renegotiation, the number of renegotiation rounds, and the number of amendments to the loan agreement. Our findings survive numerous robustness checks and confirm that access to superior information encourages private debt renegotiation.

Suggested Citation

  • Christophe Godlewski & Bulat Sanditov, 2024. "Bank loan renegotiation and financial institutions' network," Post-Print hal-04642628, HAL.
    • Handle: RePEc:hal:journl:hal-04642628
    DOI: 10.1016/j.irfa.2024.103409
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    More about this item

    Keywords

    Financial contracts; Bank loan; Renegotiation; Syndicated lending; Social network analysis; Lender network; Lender centrality; Sustainable Development Goals;
    All these keywords.

    JEL classification:

    • 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
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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