NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Liquidity Risk and Syndicate Structure

Evan Gatev, Philip Strahan

NBER Working Paper No. 13802
Issued in February 2008
NBER Program(s):   CF

We offer a new explanation of loan syndicate structure based on banks' comparative advantage in managing systematic liquidity risk. When a syndicated loan to a rated borrower has systematic liquidity risk, the fraction of passive participant lenders that are banks is about 8% higher than for loans without liquidity risk. In contrast, liquidity risk does not explain the share of banks as lead lenders. Using a new measure of ex-ante liquidity risk exposure, we find further evidence that syndicate participants specialize in liquidity-risk management while lead banks manage lending relationships. Links from transactions deposits to liquidity exposure are about 50% larger at participant banks than at lead arrangers.

download in pdf format
   (215 K)

email paper

This paper is available as PDF (215 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Gatev, Evan & Strahan, Philip E., 2009. "Liquidity risk and syndicate structure," Journal of Financial Economics, Elsevier, vol. 93(3), pages 490-504, September.

Users who downloaded this paper also downloaded these:
Gatev, Schuermann, and Strahan w12234 Managing Bank Liquidity Risk: How Deposit-Loan Synergies Vary with Market Conditions
Diamond and Rajan w7430 Liquidity Risk, Liquidity Creation and Financial Fragility: A Theory of Banking
Strahan, Gatev, and Schuermann w10982 How do Banks Manage Liquidity Risk? Evidence from Equity and Deposit Markets in the Fall of 1998
Garleanu and Pedersen w12887 Liquidity and Risk Management
Strahan w13798 Liquidity Production in 21st Century Banking
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us