Local versus foreign banks: A home market advantage in loan syndications

    Research output: Contribution to journalArticleResearchpeer-review

    3 Citations (Scopus)

    Abstract

    This paper investigates the contract terms of local versus foreign bank lead loan syndications to test two opposing theories: the home market advantage gained by closer geographical proximity and soft information from existing banking relationships, versus the hold-up problem where banks exploit their information advantage at the borrower s expense. The home market advantage was supported with domestic banks informationally superior to their foreign counterparts. Loans arranged by the former carry lower interest rates, have longer maturities, and are less likely to require collateral. These results are robust after controlling for the non-randomness of the lender-borrower matching process.
    Original languageEnglish
    Pages (from-to)29 - 39
    Number of pages11
    JournalInternational Review of Financial Analysis
    Volume37
    DOIs
    Publication statusPublished - 2015

    Cite this

    @article{0b5001aa5b6b460c984dac38268aa384,
    title = "Local versus foreign banks: A home market advantage in loan syndications",
    abstract = "This paper investigates the contract terms of local versus foreign bank lead loan syndications to test two opposing theories: the home market advantage gained by closer geographical proximity and soft information from existing banking relationships, versus the hold-up problem where banks exploit their information advantage at the borrower s expense. The home market advantage was supported with domestic banks informationally superior to their foreign counterparts. Loans arranged by the former carry lower interest rates, have longer maturities, and are less likely to require collateral. These results are robust after controlling for the non-randomness of the lender-borrower matching process.",
    author = "Vu, {Thi Bao Tram} and Do, {Minh Viet} and Skully, {Michael Thomas}",
    year = "2015",
    doi = "10.1016/j.irfa.2014.11.002",
    language = "English",
    volume = "37",
    pages = "29 -- 39",
    journal = "International Review of Financial Analysis",
    issn = "1057-5219",
    publisher = "Elsevier",

    }

    Local versus foreign banks: A home market advantage in loan syndications. / Vu, Thi Bao Tram; Do, Minh Viet; Skully, Michael Thomas.

    In: International Review of Financial Analysis, Vol. 37, 2015, p. 29 - 39.

    Research output: Contribution to journalArticleResearchpeer-review

    TY - JOUR

    T1 - Local versus foreign banks: A home market advantage in loan syndications

    AU - Vu, Thi Bao Tram

    AU - Do, Minh Viet

    AU - Skully, Michael Thomas

    PY - 2015

    Y1 - 2015

    N2 - This paper investigates the contract terms of local versus foreign bank lead loan syndications to test two opposing theories: the home market advantage gained by closer geographical proximity and soft information from existing banking relationships, versus the hold-up problem where banks exploit their information advantage at the borrower s expense. The home market advantage was supported with domestic banks informationally superior to their foreign counterparts. Loans arranged by the former carry lower interest rates, have longer maturities, and are less likely to require collateral. These results are robust after controlling for the non-randomness of the lender-borrower matching process.

    AB - This paper investigates the contract terms of local versus foreign bank lead loan syndications to test two opposing theories: the home market advantage gained by closer geographical proximity and soft information from existing banking relationships, versus the hold-up problem where banks exploit their information advantage at the borrower s expense. The home market advantage was supported with domestic banks informationally superior to their foreign counterparts. Loans arranged by the former carry lower interest rates, have longer maturities, and are less likely to require collateral. These results are robust after controlling for the non-randomness of the lender-borrower matching process.

    U2 - 10.1016/j.irfa.2014.11.002

    DO - 10.1016/j.irfa.2014.11.002

    M3 - Article

    VL - 37

    SP - 29

    EP - 39

    JO - International Review of Financial Analysis

    JF - International Review of Financial Analysis

    SN - 1057-5219

    ER -