Key factors affecting internationally active banks’ decisions to participate in loan syndications

Abstract

The impact of banks’ financial characteristics on their decisions to participate in loan syndications is assessed. From the analysis, it appears that poorly performing banks tend, on average, to be more involved in syndications. Policymakers should perhaps monitor more closely the concentration of credit risk associated with syndicated loans held on the books of under-performing banks.

Acknowledgments

The views expressed are those of the authors and do not necessarily reflect those of either the Bank for International Settlements, or of Dışbank.

The authors would like to thank, without implicating them in remaining errors, Phil Molyneux and David Marqués Ibañez for helpful comments.

Notes

Asset size cannot be controlled for directly because of its correlation with the other bank-specific balance sheet and profit/loss statement variables.

The analysis is restricted to institutions from industrialized countries for the sake of homogeneity and also because participation in loan syndications by banks from emerging countries represents a very small share of the total sample.