Title: Liquidity risk and syndicate structure
First published: 2008
Description: "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"--National Bureau of Economic Research web site.
LC classification: HB1