Bank Lending Networks, Experience, Reputation, and Borrowing Costs: Empirical Evidence from the French Syndicated Lending Market(Article)(Open Access)
- aUniversity of Haute Alsace, EM Strasbourg Business School, LaRGE Research Center, France
- bUNU-MERIT, Maastricht University, Netherlands
- cUniversity of Strasbourg, BETA Research Center, France
- dEM Strasbourg Business School, University of Strasbourg, BETA Research Center, France
Abstract
We investigate the network structure of bank lending markets and evaluate the impact of lenders' network centrality, considered a measure of their experience and reputation, on borrowing costs. We show that the French market for syndicated bank loans is a 'small world' characterized by large local density and short social distances between lenders. Such a network structure allows for better information and resources flows between banks thus enhancing their social captial. We then show that lenders' experience and reputation play a significant role in reducing loan spreads and thus increasing borrower's wealth. © 2012 Blackwell Publishing Ltd.
- ISSN: 0306686X
- Source Type: Journal
- Original language: English
- DOI: 10.1111/j.1468-5957.2011.02269.x
- Document Type: Article
Godlewski, C.J.; EM Strasbourg Business School, PEGE-LaRGE, LaRGE Research Center, 61 avenue de la Forêt Noire, France;
© Copyright 2012 Elsevier B.V., All rights reserved.
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