Abstract/Summary

With three empirical essays, this thesis aims to offer additional empirical evidence on syndicated loans. Specifically, the first two essays focus on the role played by bank market structure in determining syndicated loan prices (Chapter 3) and syndicate structure (Chapter 4) by using US data. The third essay (Chapter 5) further investigates the determination of loan prices and syndicate structure in an emerging market, China, where corporate borrowers carry unique characteristics, such as low information transparency and state-ownership. I show supporting evidence to market power hypothesis that syndicated loan prices are positively associated with the concentration of both borrower’s and lead arranger’s markets but not that of participant lenders’ markets. In addition, loan prices are more sensitively to the concentration of lead arranger’s market than to borrower’s market. In a sharp contrast, loan prices are negatively associated with bank concentration if a loan syndication is led by an investment bank or non-bank financial institution. The thesis also provides novel evidence on the role of market power on syndicate structure where a lead arranger with a greater bank market power would effectively alleviate the asymmetric information problem between lead arranger and the participant banks by performing more ex-ante screen and ex-post monitor activities leading to a more dispersed syndicate structure. Finally, I study how earnings quality and state-ownership affect loan terms, syndicated structure and foreign lender participation in leading loan syndication in China. I show that earnings quality has little impact on syndicate structure but it has a stronger impact on the spreads of loans issued to state-owned enterprises (SOEs) and loans led by foreign lenders. State-ownership, instead, alleviates the problems of adverse selection and moral hazards in loan syndication and motivates foreign bank to participate.