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- Title
The Syndicated Loan Market: Evidence from Central, Eastern and South-Eastern Europe.
- Authors
Luma, Zana Beqiri
- Abstract
In countries with less developed capital markets, bond and equity financing are a limited alternative to bank loans for firms needing large loans. 1 The syndicated loan market is seen as a way of circumventing this problem. This paper analyses syndicated loan facilities in emerging Europe as an alternative form of financing compared to debt and equity issues. Using data on 1004 syndicated loan deals granted to borrowers from 12 Central, Eastern and South-Eastern European countries from the Thomson One Banker database, we provide evidence on the evolution of the syndicated loan market over time. The functioning and the mechanics of syndicated loan deals are described, with an emphasis on the advantage and disadvantages of this source of financing for both borrowers and lenders. Furthermore, we analyse the main features of syndicated loan deals - loan size and loan spreads - by industry, loan purpose, loan type, loan grade and syndicate structure. We find syndicated loan terms (such as loan spread and size) to be sensitive to the macroeconomic environment of the country, economic cycles over time, syndicate structure as well as industry and loan types. The implication of these results is that governments should aim at increasing competition in the banking sector, addressing macroeconomic weaknesses as well as ensuring a proper enforcement of laws related to disclosure of financial information as there is indication that these improve syndicated loan terms. This will facilitate the expansion of the syndicated loan market that will contribute to the financing of firms and more general to the economic development of these countries.
- Subjects
EUROPE; SYNDICATED loans; BUSINESS cycles; BANK loans; CAPITAL market; LOANS
- Publication
Vizione, 2023, Issue 41, p179
- ISSN
1409-8962
- Publication type
Article