TY  - JOUR
AU  - Gatev,Evan
AU  - Strahan,Philip
TI  - Liquidity Risk and Syndicate Structure
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13802
PY  - 2008
Y2  - February 2008
UR  - http://www.nber.org/papers/w13802
L1  - http://www.nber.org/papers/w13802.pdf
N1  - Author contact info:
Evan Gatev
Simon Fraser University
E-Mail: ega8@sfu.ca

Philip Strahan
Carroll School of Management
324B Fulton Hall
Boston College
Chestnut Hill, MA  02467
Tel: 617/552-6430
E-Mail: philip.strahan@bc.edu
AB  - 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.
ER  -