Why do Banks Join Loan Syndications?: The Case of Participant Banks

Yener Altunbas; Alper Kara

doi:10.1080/02642060903100364

Why do Banks Join Loan Syndications? The Case of Participant Banks

Yener Altunbas, Alper Kara

Research output: Contribution to journal › Article › peer-review

4 Citations (Scopus)

Abstract

This paper examines the determinants of banks' involvement in loan syndication using the financial information of 847 participant banks. The results indicate that participant banks join loan syndications when their capital levels are sufficient enough to support the extra risk taken. Banks with lower net interest margin are found to choose syndicated lending as a way of boosting their margins. The motivation of risk diversification through participating in loan syndications is also confirmed.

Original language	English
Pages (from-to)	1063-1074
Number of pages	12
Journal	Service Industries Journal
Volume	31
Issue number	7
DOIs	https://doi.org/10.1080/02642060903100364
Publication status	Published - 2011
Externally published	Yes

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Cite this

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title = "Why do Banks Join Loan Syndications?: The Case of Participant Banks",

abstract = "This paper examines the determinants of banks' involvement in loan syndication using the financial information of 847 participant banks. The results indicate that participant banks join loan syndications when their capital levels are sufficient enough to support the extra risk taken. Banks with lower net interest margin are found to choose syndicated lending as a way of boosting their margins. The motivation of risk diversification through participating in loan syndications is also confirmed.",

keywords = "Banks, Syndicated loans, Capital adequacy, Risk diversification, Participant banks, Arranger banks",

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AB - This paper examines the determinants of banks' involvement in loan syndication using the financial information of 847 participant banks. The results indicate that participant banks join loan syndications when their capital levels are sufficient enough to support the extra risk taken. Banks with lower net interest margin are found to choose syndicated lending as a way of boosting their margins. The motivation of risk diversification through participating in loan syndications is also confirmed.

KW - Banks

KW - Syndicated loans

KW - Capital adequacy

KW - Risk diversification

KW - Participant banks

KW - Arranger banks

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DO - 10.1080/02642060903100364

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Why do Banks Join Loan Syndications? The Case of Participant Banks

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