Non-bank lending and firm performance: evidence from the syndicate loan market

Biswas, S. ORCID: https://orcid.org/0000-0003-3124-5070, Ozkan, N. and Yin, J. (2025) Non-bank lending and firm performance: evidence from the syndicate loan market. Journal of Banking and Finance, 181. 107561. ISSN 1872-6372 doi: 10.1016/j.jbankfin.2025.107561

Abstract/Summary

We find that in the leveraged loan sector, firms borrowing from non-banks have lower profitability following loan originations, compared to firms borrowing from banks, after controlling for observable factors. As non-bank borrowers experience less intense monitoring than bank borrowers, they engage in more risk-taking, which could explain their lower profitability following loan issuance. Using the leveraged lending guidance as a plausibly exogenous shock, which resulted in the migration of borrowers from banks to non-banks, we provide causal evidence corroborating our main results. Overall, our findings suggest that macroprudential policies which exclusively target the traditional banking sector may have negative consequences.

Item Type	Article
URI	https://centaur.reading.ac.uk/id/eprint/125020
Identification Number/DOI	10.1016/j.jbankfin.2025.107561
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Elsevier
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