Template-type: ReDIF-Paper 1.0
Author-Name: Veljko Fotak 
Title: A Spark from the Public Sector: Co-lending by Government-owned and Private-sector Lenders
Abstract: Co-lending by private-sector and government-owned lenders accounts for nearly one-tenth of all syndicated-loan funding to corporate borrowers over the three decades spanning 1980 to 2010. I find evidence that private-sector institutions co-lend with government-owned lenders to benefit from better legal protection and implicit debt guarantees. This leads to loans with lower spreads, longer maturities, larger syndicates, less collateral, and a greater participation of foreign lenders, particularly for borrowers headquartered in countries with weak property rights. Yet, firms that receive loans from a mixed syndicate comprised of both private and government-owned lenders show a decline in profitability and valuation in subsequent years, which suggests that governmentowned lenders fail to efficiently allocate funding.
Classification-JEL: G15, G32, G38
Keywords: Government-owned banks, Syndicated loans
Length: 61 pages 
Number: 1624
Creation-Date: 2016
File-URL: https://repec.unibocconi.it/baffic/baf/papers/cbafwp1624.pdf
File-Format: application/pdf
File-Size: 1140
Handle: RePEc:baf:cbafwp:cbafwp1624