BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 7/2009:
Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans
Zuzana Fungacova ()
, Christophe J. Godlewski ()
and Laurent Weill ()
Abstract: This paper considers whether local bank participation
exerts an impact on the spreads for syndicated loans in Russia. Following
Berger, Klapper and Udell (2001), we test whether local banks possess a
superior ability to deal with information asymmetries. Using a sample of
528 syndicated loans to Russian borrowers, we perform regressions of the
spread on a set of variables including information on local bank
participation and the characteristics of loans and borrowers. Unlike
earlier studies, we distinguish foreign banks with a local presence from
those without such presence. The intuition here is that a local presence
may influence a foreign bank’s monitoring ability and access to information
about borrowers. We observe no significant impact on the spread when there
is local bank participation in a syndicated loan, nor do we find any
significant influence of the presence of domestic-owned banks or
foreign-owned banks on the spread. Additional estimations considering
subsamples with exacerbated information asymmetries provide similar
results. Therefore our conclusion is that local banks do not benefit from
an advantage in monitoring ability and in information in Russia.
Keywords: bank; information asymmetry; loan; syndication; Russia; (follow links to similar papers)
JEL-Codes: G21; P34; (follow links to similar papers)
30 pages, July 1, 2009
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