CEF.UP – FIN Seminar

Thursday – April 3^rd, 2025 at 1:00 p.m. | Room 305| Online

Bank Syndicates and Liquidity Provision

João Santos  – Federal Reserve Bank of New York (U.S.A.), NOVA School of Business and Economics, Universidade Nova de Lisboa.

Abstract:

“We provide a model where credit lines syndicates commit to provide liquidity. Our model yields predictions about the syndicate, pricing and the special role of the lead bank. Consistent with our model, we find that syndicate members with a relationship with the borrower make larger investments and are less likely to exit the syndicate. Lead banks offer a discount particularly on commitment fees to borrowers they have relationships with. Consistent with their unique role, lead banks are more likely increase their investments following the failure of syndicate members, although not enough to fully offset the lost commitment.”