Is the Corporate Loan Market Globally Integrated? A Pricing Puzzle
By Mark Carey, Greg Nini. 2004
228 citations recorded by the source corpus.
We offer evidence that interest rate spreads on syndicated loans to corporate borrowers are economically significantly smaller in Europe than in the U.S., other things equal. Differences in borrower, loan and lender characteristics associated with equilibrium mechanisms suggested in the literature do not appear to explain the phenomenon. Borrowers overwhelmingly issue in their natural home market and bank portfolios display significant home "bias." This may explain why pricing discrepancies are not competed away, but the fundamental causes of the discrepancies remain a puzzle. Thus, important determinants of loan origination market outcomes remain to be identified, home "bias" appears to be material for pricing, and corporate financing costs differ in Europe and the U.S.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/d657939b7f4998db412df1424ad1b39182382ea7
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Mariassunta Giannetti
- Luc Laeven
- David Gaddis Ross
- Thorsten Beck
- Stijn Claessens
- Asli Demirgüç-Kunt
- Kalina B. Manova
- Nuria Suárez
In Finance
- Mariassunta Giannetti
- Luc Laeven
- David Gaddis Ross
- F. González
- Thorsten Beck
- Asli Demirgüç-Kunt
- Fabián Valencia
- Stijn Claessens
Citations in the corpus
- The "Dominant Bank Effect:" How High Lender Reputation Affects the Information Content and Terms of Bank Loans (2010, background): “Covenant indicators often assume positive coefficients and thus may proxy for unobservable borrower risk factors (e.g., Carey and Nini 2007).”
- The Private Equity Advantage: Leveraged Buyout Firms and Relationship Banking (2011, unknown): “Following the previous literature (Ivashina 2009; Carey and Nini, 2007), we control for: (i) Deal amount – the logarithm of the total loan amount, (ii) Maturity – maturity (in months), (iii) Unsecured – a dummy variable”
- The Flight Home Effect: Evidence from the Syndicated Loan Market During Financial Crises (2012, methodology): “This database is widely used for studying the international syndicated loan market (see, e.g., Esty and Megginson, 2003; Carey and Nini, 2007).”