Bank Lending Networks, Experience, Reputation, and Borrowing Costs: Empirical Evidence from the French Syndicated Lending Market

: 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...

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Bibliographic Details
Published in:	Journal of business finance & accounting Vol. 39; no. 1-2; pp. 113 - 140
Main Authors:	Godlewski, Christophe J., Sanditov, Bulat, Burger-Helmchen, Thierry
Format:	Journal Article
Language:	English
Published:	Oxford, UK Blackwell Publishing Ltd 01-01-2012 Wiley Blackwell Wiley
Series:	Journal of Business Finance & Accounting
Subjects:	bank lending Bank loans Borrowing Business administration experience Financial information France Humanities and Social Sciences Lending loan syndication Networks Participating loans reputation Reputations Social capital Social distance social network analysis Social networks Studies France
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Summary:	: 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.
Bibliography:	ArticleID:JBFA2269 istex:D6BACBC29603B184EB1D1CEA5B853D3B6EA9763B ark:/67375/WNG-N2GTJTCQ-5 th ENEF Meeting in Strasbourg and ECIS workshop at Eindhoven University of Technology for helpful comments. Bulat Sanditov acknowledges financial support from the AnCoRA project funded by ANR (ANR 06 APPR 003). The usual disclaimer applies. (Paper received November 2010, revised version accepted October 2011) The first author is from the University of Haute Alsace & EM Strasbourg Business School (LaRGE Research Center). The second author is from UNU‐MERIT, Maastricht University & University of Strasbourg (BETA Research Center). The third author is from EM Strasbourg Business School, University of Strasbourg (BETA Research Center). They thank Andrew Stark (editor), an anonymous referee, Iftekhar Hasan, Koen Schoors, Armin Schwienbacher, Ming Ming Zhou, and participants of the French Finance Association (AFFI) Meeting 2011 Montpellier, the BOFIT Seminar at the Bank of Finland, 8 ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23
ISSN:	0306-686X 1468-5957
DOI:	10.1111/j.1468-5957.2011.02269.x