How banks price loans for LBOs: an empirical analysis of spread determinants
Autor(a) principal: | |
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Data de Publicação: | 2022 |
Outros Autores: | , , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.14/33800 |
Resumo: | This paper examines which factors determine the pricing of loans for LBOs, using a worldwide sample of 11,111 loans closed in the 2000–2016 period. Our findings are consistent with the hypotheses that loans for LBOs extended to borrowers in market- versus bank-based financial systems are differently priced, and that law and institutional characteristics are important determinants of spreads for deals closed in market-oriented countries. Despite LBO loan pricing differing significantly in normal versus crisis times, loans extended to borrowers in market-based financial systems have higher spreads than those where banks play a major role. Our results also support the hypothesis of tranching as a mechanism of reducing spreads by completing financial markets and mitigating informational asymmetries. Finally, a robust convex relationship between spread and maturity is found, suggesting higher market competition by banks and investors for standard, medium-term maturities. |
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How banks price loans for LBOs: an empirical analysis of spread determinantsLoan pricingLBOsFinancial crisisMarket-basedTerm structure of spreadsThis paper examines which factors determine the pricing of loans for LBOs, using a worldwide sample of 11,111 loans closed in the 2000–2016 period. Our findings are consistent with the hypotheses that loans for LBOs extended to borrowers in market- versus bank-based financial systems are differently priced, and that law and institutional characteristics are important determinants of spreads for deals closed in market-oriented countries. Despite LBO loan pricing differing significantly in normal versus crisis times, loans extended to borrowers in market-based financial systems have higher spreads than those where banks play a major role. Our results also support the hypothesis of tranching as a mechanism of reducing spreads by completing financial markets and mitigating informational asymmetries. Finally, a robust convex relationship between spread and maturity is found, suggesting higher market competition by banks and investors for standard, medium-term maturities.Veritati - Repositório Institucional da Universidade Católica PortuguesaPinto, João M.Pacheco, Luís K.Alves, Paulo P.Cunha, M. Ricardo2022-01-01T01:30:15Z2022-12-012022-12-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.14/33800eng0920-855010.1007/s10693-021-00355-y85106405640000653117200001info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-01-09T01:36:01Zoai:repositorio.ucp.pt:10400.14/33800Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T18:27:24.235425Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
How banks price loans for LBOs: an empirical analysis of spread determinants |
title |
How banks price loans for LBOs: an empirical analysis of spread determinants |
spellingShingle |
How banks price loans for LBOs: an empirical analysis of spread determinants Pinto, João M. Loan pricing LBOs Financial crisis Market-based Term structure of spreads |
title_short |
How banks price loans for LBOs: an empirical analysis of spread determinants |
title_full |
How banks price loans for LBOs: an empirical analysis of spread determinants |
title_fullStr |
How banks price loans for LBOs: an empirical analysis of spread determinants |
title_full_unstemmed |
How banks price loans for LBOs: an empirical analysis of spread determinants |
title_sort |
How banks price loans for LBOs: an empirical analysis of spread determinants |
author |
Pinto, João M. |
author_facet |
Pinto, João M. Pacheco, Luís K. Alves, Paulo P. Cunha, M. Ricardo |
author_role |
author |
author2 |
Pacheco, Luís K. Alves, Paulo P. Cunha, M. Ricardo |
author2_role |
author author author |
dc.contributor.none.fl_str_mv |
Veritati - Repositório Institucional da Universidade Católica Portuguesa |
dc.contributor.author.fl_str_mv |
Pinto, João M. Pacheco, Luís K. Alves, Paulo P. Cunha, M. Ricardo |
dc.subject.por.fl_str_mv |
Loan pricing LBOs Financial crisis Market-based Term structure of spreads |
topic |
Loan pricing LBOs Financial crisis Market-based Term structure of spreads |
description |
This paper examines which factors determine the pricing of loans for LBOs, using a worldwide sample of 11,111 loans closed in the 2000–2016 period. Our findings are consistent with the hypotheses that loans for LBOs extended to borrowers in market- versus bank-based financial systems are differently priced, and that law and institutional characteristics are important determinants of spreads for deals closed in market-oriented countries. Despite LBO loan pricing differing significantly in normal versus crisis times, loans extended to borrowers in market-based financial systems have higher spreads than those where banks play a major role. Our results also support the hypothesis of tranching as a mechanism of reducing spreads by completing financial markets and mitigating informational asymmetries. Finally, a robust convex relationship between spread and maturity is found, suggesting higher market competition by banks and investors for standard, medium-term maturities. |
publishDate |
2022 |
dc.date.none.fl_str_mv |
2022-01-01T01:30:15Z 2022-12-01 2022-12-01T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.14/33800 |
url |
http://hdl.handle.net/10400.14/33800 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
0920-8550 10.1007/s10693-021-00355-y 85106405640 000653117200001 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799131991562518528 |