Liquidity Risk and Syndicate Structure / Evan Gatev, Philip Strahan.

Format:

Book

Author/Creator:

Gatev, Evan.

Contributor:

National Bureau of Economic Research.

Strahan, Philip.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13802.

NBER working paper series no. w13802

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2008.

Summary:

We offer a new explanation of loan syndicate structure based on banks' comparative advantage in managing systematic liquidity risk. When a syndicated loan to a rated borrower has systematic liquidity risk, the fraction of passive participant lenders that are banks is about 8% higher than for loans without liquidity risk. In contrast, liquidity risk does not explain the share of banks as lead lenders. Using a new measure of ex-ante liquidity risk exposure, we find further evidence that syndicate participants specialize in liquidity-risk management while lead banks manage lending relationships. Links from transactions deposits to liquidity exposure are about 50% larger at participant banks than at lead arrangers.

Notes:

Print version record

February 2008.