Title: Lending Relationships and the Pricing of Syndicated Loans
Abstract:Using a dataset on syndicated loan primary market pricing adjustments, we examine whether relationship banks’ information advantage facilitates price discovery in loan issuances. We find that the lead...Using a dataset on syndicated loan primary market pricing adjustments, we examine whether relationship banks’ information advantage facilitates price discovery in loan issuances. We find that the lead bank makes fewer adjustments to the initial pricing terms of a syndicated loan and shortens the syndication time when it has a stronger relationship with the borrower. A stronger relationship also reduces loan underpricing. A relationship lead bank relies less on information from syndicate members. Exogenous shocks to relationships caused by bank mergers and closures confirm our findings. We contribute to the literature by showing that relationship lending improves loan pricing efficiency. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4730 .Read More
Publication Year: 2023
Publication Date: 2023-03-27
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 9
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot