Development Banks and the Syndicate Structure: Evidence From a World Sample

51 Pages Posted: 24 Jun 2020 Last revised: 30 Dec 2020

See all articles by Marta Degl'Innocenti

Marta Degl'Innocenti

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM); University of Southampton

Marco Frigerio

University of Milan

Si Zhou

Shanghai University

Date Written: December 30, 2020

Abstract

Do development banks influence the syndicate structure? Using a global dataset of 12,322 syndicated loans from 2001 to 2016 across 78 countries, we show that the lead banks decrease their loan shares and form less concentrated structure in mixed syndicates including both development banks and private-sector banks as participant lenders. In line with the social view on the role of development banks, we find that such an effect is stronger during periods of financial instability, particularly for the green industry and in the case of borrowers that are financially constrained. Conversely, we do not find any evidence that mixed syndicates exhibit a different syndicate structure for political distortions. Finally, we find that mixed syndicates are not associated with higher covenant violations and increasing of the borrowers’ risk profile after the loan origination. Our results are robust when accounting for relationship lending, asymmetric information within the syndicate, lenders’ lending expertise, borrowers’ opacity, types of loan, and ranking hierarchy in the syndicate among the others.

Keywords: Syndicated loan market, Syndicate structure, Development banks, Loan-level data

JEL Classification: D82, G21, G28

Suggested Citation

Degl'Innocenti, Marta and Frigerio, Marco and Zhou, Si, Development Banks and the Syndicate Structure: Evidence From a World Sample (December 30, 2020). Available at SSRN: https://ssrn.com/abstract=3615477 or http://dx.doi.org/10.2139/ssrn.3615477

Marta Degl'Innocenti

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Marco Frigerio

University of Milan ( email )

Via Festa del Perdono 7
Milano, 20121
Italy

Si Zhou (Contact Author)

Shanghai University ( email )

Room 522, Building 1,
Shanghai University,
Shanghai, Shanghai 20044
China

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