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The Agency Structure of Loan Syndicates
Author(s) -
François Pascal,
MissonierPiera Franck
Publication year - 2007
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.2007.00169.x
Subject(s) - syndicate , delegate , loan , business , agency (philosophy) , principal–agent problem , information asymmetry , sample (material) , finance , computer science , philosophy , chemistry , epistemology , chromatography , programming language , corporate governance
Leaders of loan syndicates often delegate some administrative tasks to banks known as co‐agents. One reason is that co‐agents are specialized banks that help split the costs of managing the syndicate. Another reason is that co‐agents monitor the leader on behalf of syndicate members to mitigate informational asymmetry problems. Large sample tests on the Dealscan database provide support for both arguments. Evidence of repeated contracting between the same banks explains the moderate magnitude of monitoring effects.