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...n. In this respect, banks are quite distinct compared to other “arm’s lengths” lenders and providers of direct finance such as bonds. Established literature (see for example Petersen and Rajan, 1994; =-=Berger and Udell, 1995-=-; Bhattacharya and Thakor, 1993; Boot, 2000) suggests that relationship banking, involving repeat lending to the same borrower, helps to reduce information asymmetries and lowers loan spreads. Asymmet...

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...o other “arm’s lengths” lenders and providers of direct finance such as bonds. Established literature (see for example Petersen and Rajan, 1994; Berger and Udell, 1995; Bhattacharya and Thakor, 1993; =-=Boot, 2000-=-) suggests that relationship banking, involving repeat lending to the same borrower, helps to reduce information asymmetries and lowers loan spreads. Asymmetric information has two facets in loan synd...

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... completely eliminate, problems of asymmetry. Arrangers refrain from opportunistic behaviour to protect their reputation and to secure future business from both lenders and borrowers. The literature (=-=Dennis and Mullineaux, 2000-=-; Lee and Mullineaux, 2001; Panyagometh and Roberts, 2002) also reports that arranger reputation leads to lower spreads for borrowers. Here we provide evidence that partially supports this argument. W...

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...e delegation of responsibility and reliance on arrangers leads to information asymmetries among syndicate members (Pichler and Wilhelm, 2001; Lee and Mullineaux, 2004; Jones et al., 2005; Sufi, 2007; =-=Bharath et al., 2010-=-; Ivashina, 2009; Focarelli et al. 2008). 1 One strand of the literature investigates the implications of information asymmetries among lenders on the structure of loan syndicates and possible opportu...

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...sibility and reliance on arrangers leads to information asymmetries among syndicate members (Pichler and Wilhelm, 2001; Lee and Mullineaux, 2004; Jones et al., 2005; Sufi, 2007; Bharath et al., 2010; =-=Ivashina, 2009-=-; Focarelli et al. 2008). 1 One strand of the literature investigates the implications of information asymmetries among lenders on the structure of loan syndicates and possible opportunistic behaviour...

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... lending relationships and syndicate information asymmetries, and is followed by the pricing model and sample description. 3. METHODOLOGY and DATA Following the loan pricing literature (among others, =-=Agbanzo et al., 1999-=-, Carey and Nini, 2007 and Ivashina, 2009), we rely on a linear model that explains loan price as a function of information asymmetries among lenders, existence of previous lending relationships, arra...

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...iance on arrangers leads to information asymmetries among syndicate members (Pichler and Wilhelm, 2001; Lee and Mullineaux, 2004; Jones et al., 2005; Sufi, 2007; Bharath et al., 2010; Ivashina, 2009; =-=Focarelli et al. 2008-=-). 1 One strand of the literature investigates the implications of information asymmetries among lenders on the structure of loan syndicates and possible opportunistic behaviour consequences 1 From th...

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...onsible for due diligence, allocation of the loan to other syndicate members, and ex post monitoring, banks in the syndicate will often rely on the lead bank’s reputation in making lending decisions (=-=Ross, 2010-=-). Since the arranger and participants are repeat players in the loan syndication market, if the lead arranger shirks in its due diligence and monitoring 5 At this stage, in most cases, an information...

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...y on arranger banks both before and after loan signing. The delegation of responsibility and reliance on arrangers leads to information asymmetries among syndicate members (Pichler and Wilhelm, 2001; =-=Lee and Mullineaux, 2004-=-; Jones et al., 2005; Sufi, 2007; Bharath et al., 2010; Ivashina, 2009; Focarelli et al. 2008). 1 One strand of the literature investigates the implications of information asymmetries among lenders on...