When Banks are Insiders: Evidence from the Global Syndicated Loan Market. FDIC Center for Financial Research Working Paper, No. 2008-01

摘要

The paper studies the impact of connections between banks and firms on the lead arranger bank choice and loan pricing in the global syndicated loan market. We examine cases where the bank is an insider on the borrower firm by representation on the board of directors or by holding equity stakes directly and indirectly (through affiliated institutional money managers). These connections have a positive and significant effect on a firms lead arranger bank choice. Additionally, we find that banks charge higher interest rate spreads and face less credit risk after origination when lending to firms where the bank is an insider. Our findings suggest that the influence of banks over firms seems to accrue mostly to the banks benefit, and therefore conclude for the existence of a conflict of interest between the role of lender and that of insider in the firm.