Uncovering the Co-Lender Effect: Resilience and Fragility in the Global Syndicated Lending Network and Impacts on Developing Countries

Marina Conesa Martínez; Giulia Lotti; Andrew Powell

doi:10.1515/rne-2024-0054

Artikel

Uncovering the Co-Lender Effect: Resilience and Fragility in the Global Syndicated Lending Network and Impacts on Developing Countries

Marina Conesa Martínez , Giulia Lotti und Andrew Powell

Veröffentlicht/Copyright: 22. April 2025

Veröffentlicht von

Veröffentlichen auch Sie bei De Gruyter Brill

Manuskript einreichen Informationen für Autor*innen Erkunden Sie dieses Fachgebiet

Aus der Zeitschrift Review of Network Economics Band 24 Heft 1

Abstract

Banks lend through syndicates to diversify risk, but co-lending relationships are sticky. This paper finds a “co-lender effect”, namely that banks’ lending volumes are impacted by shocks to co-lenders. We create a new database of cross-border syndicated lending to developing countries from 1993 to 2020. We characterize the network and, as suggested by theory, find both resilience and fragility. Central players propagate shocks, while the impacts of fringe banks are negligible. The global financial crisis and the growth of South-South lenders prompted a decline in network centrality and higher network density with more connections between a declining number of participants. We find further support for a co-lender effect, compounding the sharp fall in lending during the Covid-19 crisis, employing a different methodology.

Keywords: syndicate loans; shock propagation; systemic banking crises; banks; Covid-19

JEL Classification: F34; G21; L14

Corresponding author: Andrew Powell, Williams College, Williamstown, USA, E-mail: app1@williams.edu

Disclaimer: The majority of the research for this paper was conducted while the three authors were at the Inter American Development Bank. The views expressed herein are strictly those of the authors and should not be attributed to the IDB, its Executive Board, supporting partners or any other institution. The authors wish to thank Matías Busso, Julián Caballero and Oscar Mitnik, as well as participants at the WEFIDEV seminar series, the LACEA/LAMES Annual Meeting, the FDIC/JSFR Bank Research Conference, participants at the IDB’s “SPD Open House” and at an IDB Research Dept. conference, for their helpful comments and suggestions. We also wish to thank the anonymous reviewers and Lukasz Grzybowski, the editor, for valuable comments. All mistakes remain our own.

Appendix

See Table A1

Table A1:

Stickiness of edges in the network.

	(1)	(2)	(3)	(4)	(5)	(6)
	Existing edge_t	Existing edge_t	Existing edge_t	Existing edge_t	Existing edge_t	Existing edge_t
Existing edge_t−1	0.4951^***	0.3307^***	0.2968^***	0.5896^***	0.3765^***	0.3369^***
	(0.002)	(0.001)	(0.001)	(0.002)	(0.002)	(0.002)
Existing edge_t−2		0.1938^***	0.1567^***		0.2091^***	0.1653^***
		(0.001)	(0.001)		(0.002)	(0.002)
Existing edge_t−3		0.1521^***	0.0991^***		0.1644^***	0.1033^***
		(0.001)	(0.001)		(0.002)	(0.002)
Existing edge_t−4			0.0548^***			0.0503^***
			(0.001)			(0.002)
Existing edge_t−5			0.0513^***			0.0524^***
			(0.001)			(0.002)
Existing edge_t−6			0.0327^***			0.0256^***
			(0.001)			(0.002)
Existing edge_t−7			0.0291^***			0.0248^***
			(0.001)			(0.002)
Existing edge_t−8			0.0278^***			0.0252^***
			(0.001)			(0.002)
Existing edge_t−9			0.0227^***			0.0147^***
			(0.001)			(0.002)
Existing edge_t−10			0.0360^***			0.0412^***
			(0.001)			(0.002)
Observations	99,790,569	92,389,016	66,497,975	1,089,645	1,007,878	723,883
R-squared	0.244	0.311	0.342	0.347	0.413	0.426
No. banks 1	2,739	2,739	2,739	284	284	284
No. banks 2	2,745	2,745	2,745	283	283	283

Note: The table shows the correlation between a dummy indicating the existence of an edge at time t and dummies indicating their existence in previous periods, up to 10 years before.

References

Acemoglu, D., A. Ozdaglar, and A. Tahbaz-Salehi. 2015. “Systemic Risk and Stability in Financial Networks.” The American Economic Review 105 (2): 564–608. https://doi.org/10.1257/aer.20130456.Suche in Google Scholar

Allen, F. 1990. Developments in the International Syndicated Loan Market in the 1980s. London: Bank of England.Suche in Google Scholar

Allen, F., and D. Gale. 2000. “Financial Contagion.” Journal of Political Economy 108 (1): 1–33. https://doi.org/10.1086/262109.Suche in Google Scholar

Bats, J., A. Houben, and D. Schoenmaker. 2020. “Boosting the Resilience of Europe’s Financial System in the Coronavirus Crisis.” Bruegel blog post.Suche in Google Scholar

Beck, T., and J. Keil. 2021. Bank Performance in the Time of COVID-19: Evidence from the US. London, UK: VOXEU.Suche in Google Scholar

Bertrand, M., E. Duflo, and S. Mullainathan. 2004. “How Much Should we Trust Differences-in-Differences Estimates?” Quarterly Journal of Economics 119 (1): 249275. https://doi.org/10.1162/003355304772839588.Suche in Google Scholar

Blume, L., D. Easley, J. Kleinberg, R. Kleinberg, and E. Tardos. 2011. “Which Networks are Least Susceptible to Cascading Failures?” In Proceedings of the 2011 52nd IEEE Annual Symposium on Foundations of Computer Science. Washington: IEEE Computer Society.10.1109/FOCS.2011.38Suche in Google Scholar

Blume, L., D. Easley, J. Kleinberg, R. Kleinberg, and É. Tardos. 2013. “Network Formation in the Presence of Contagious Risk.” ACM Transactions on Economics and Computation 1 (2). https://doi.org/10.1145/2465769.2465771.Suche in Google Scholar

Blundell, R., and S. Bond. 1998. “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models.” Journal of Econometrics 87 (1): 115–43. https://doi.org/10.1016/s0304-4076(98)00009-8.Suche in Google Scholar

Caballero, J., C. Candelaria, and G. Hale. 2009. “Bank Relationships and the Depth of the Current Economic Crisis.” In FRBSF Economic Letter 2009–38. San Francisco: Federal Reserve Bank of San Francisco. https://www.frbsf.org/economic-research/publications/economic-letter/2009/december/bank-relationships-economic-crisis/.Suche in Google Scholar

Cameron, A. C., J. B. Gelbach, and D. L. Miller. 2008. “Bootstrap-Based Improvements for Inference with Clustered Errors.” The Review of Economics and Statistics 90 (3): 414–27. https://doi.org/10.1162/rest.90.3.414.Suche in Google Scholar

Cavallo, E., P. Mathieu, P. Andrew, and T. Pilar. 2015. “A New Taxonomy of Sudden Stops: Which Sudden Stops should Countries be Most Concerned About?” Journal of International Money and Finance 51: 47–70. https://doi.org/10.1016/j.jimonfin.2014.10.001.Suche in Google Scholar

Cavallo, E., and A. Powell. 2021. “Opportunities for Stronger and Sustainable Postpandemic Growth.” In 2021 Latin American and Caribbean Macroeconomic Report. IDB Publication.Suche in Google Scholar

Chowdhry, B., and V. Nanda. 1996. “Stabilization, Syndication and Pricing of IPOs.” Journal of Financial and Quantitative Analysis 31 (1): 25–42. https://doi.org/10.2307/2331385.Suche in Google Scholar

Cingano, F., F. Manaresi, and E. Sette. 2016. “Does Credit Crunch Investment Down? New Evidence on the Real Effects of the Bank-Lending Channel.” Review of Financial Studies 29 (10): 2737–73. https://doi.org/10.1093/rfs/hhw040.Suche in Google Scholar

Cortina, J., T. Didier, and S. L. Schmukler. 2021. “Global Corporate Debt During Crises: Implications of Switching Borrowing Across Markets.” Journal of International Economics 131: 103487. https://doi.org/10.1016/j.jinteco.2021.103487.Suche in Google Scholar

Cunningham, S. 2021. Causal Inference: The Mixtape. New Haven, USA: Yale University Press.10.12987/9780300255881Suche in Google Scholar

De Chaisemartin, C. 2021. “Econometrics for 1st and 2nd Year PhDs UCSB.” https://drive.google.com/file/d/1m4_oPcl0sDI955b3hYDLxheMklRowlzA/view?pli=1.Suche in Google Scholar

Dennis, S. A., and D. J. Mullineaux. 2000. “Syndicated Loans.” Journal of Financial Intermediation 9 (4): 404–26. https://doi.org/10.1006/jfin.2000.0298,Suche in Google Scholar

De Haas, R., and N. Van Horen. 2012. “International Shock Transmission After the Lehman Brothers Collapse: Evidence from Syndicated Lending.” The American Economic Review 102 (3): 231–7. https://doi.org/10.1257/aer.102.3.231.Suche in Google Scholar

Diamond, D. 1991. “Monitoring and Reputation: The Choice Between Bank Loans and Privately-Placed Debt.” Journal of Political Economy 99: 689–721. https://doi.org/10.1086/261775.Suche in Google Scholar

Freixas, X., B. Parigi, and J. Rochet. 2000. “Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank.” Journal of Money, Credit, and Banking 32 (3): 611–38. https://doi.org/10.2307/2601198.Suche in Google Scholar

Gai, P., A. Haldane, and S. Kapadia. 2011. “Complexity, Concentration and Contagion.” Journal of Monetary Economics 58 (5): 453–70. https://doi.org/10.1016/j.jmoneco.2011.05.005.Suche in Google Scholar

Goodman-Bacon, A. 2021. “Difference-in-Differences with Variation in Treatment Timing.” Journal of Econometrics 225 (2): 254–77. https://doi.org/10.1016/j.jeconom.2021.03.014.Suche in Google Scholar

Gradenecz, B. 2004. “The Syndicated Loan Market: Structure, Development and Implications.” BIS Quarterly Review.Suche in Google Scholar

Hale, G. 2012. “Bank Relationships, Business Cycles, and Financial Crises.” Journal of International Economics 88 (2): 312–25. https://doi.org/10.1016/j.jinteco.2012.01.011.Suche in Google Scholar

Hale, G., T. Kapan, and C. Minoiu. 2019. “Shock Transmission Through Cross-Border Bank Lending: Credit and Real Effects.” Review of Financial Studies hhz147. https://doi.org/10.1093/rfs/hhz147.Suche in Google Scholar

Holmstrom, B., and J. Tirole. 1997. “Financial Intermediation, Loanable Funds, and the Real Sector.” Quarterly Journal of Economics 112: 663–91. https://doi.org/10.1162/003355397555316.Suche in Google Scholar

Icard, A., and P. Turner. 2019. “Managing Global Liquidity as a Global Public Good.” Robert Triffin International working party report.Suche in Google Scholar

Iyer, R., and J. L. Peydró. 2011. “Interbank Contagion at Work: Evidence from a Natural Experiment.” Review of Financial Studies 24 (4): 1337–77. https://doi.org/10.1093/rfs/hhp105.Suche in Google Scholar

Kiyotaki, N., and J. Moore. 1997. “Credit Cycles.” Journal of Political Economy 105 (2): 211–48. https://doi.org/10.1086/262072.Suche in Google Scholar

Laeven, M. L., and M. F. Valencia. 2018. Systemic Banking Crises Revisited. IMF Working Paper 18/206. Washington: International Monetary Fund.10.5089/9781484376379.001Suche in Google Scholar

Nirei, M., J. Caballero, and V. Sushko. 2015. “Bank Capital Shock Propagation via Syndicated Interconnectedness.” Computational Economics 47 (1): 67–96. https://doi.org/10.1007/s10614-015-9493-8.Suche in Google Scholar

Pichler, P., and W. Wilhelm. 2001. “A Theory of the Syndicate: Form Follows Function.” The Journal of Finance 56 (6): 2237–64. https://doi.org/10.1111/0022-1082.00404.Suche in Google Scholar

Powell, A., and L. Rojas Suarez. 2020. Safe Banks for Healthy Economies. Washington, DC: A Joint CGD and IDB Publication.Suche in Google Scholar

Rajan, R. 1992. “Insiders and Outsiders: The Choice Between Informed and Arm’s Length Debt.” The Journal of Finance 47: 1367–400. https://doi.org/10.2307/2328944.Suche in Google Scholar

Roodman, D., M. Ø. Nielsen, J. G. MacKinnon, and M. D. Webb. 2019. “Fast and Wild: Bootstrap Inference in Stata Using Boottest.” STATA Journal 19 (1): 4–60. https://doi.org/10.1177/1536867x19830877.Suche in Google Scholar

Sufi, A. 2007. “Information Asymmetry and Financing Arrangements: Evidence from Syndicated Loans.” Journal of Finance 62 (2): 629–68. https://doi.org/10.1111/j.1540-6261.2007.01219.x.Suche in Google Scholar

Tykvová, T. 2007. “Who Chooses Whom? Syndication, Skills and Reputation.” Review of Financial Economics 16: 5–28. https://doi.org/10.1016/j.rfe.2005.10.001.Suche in Google Scholar

Vivier-Lirimont, S. 2006. “Réseau Interbancaire et Crise de Liquidité.” Revue d’Économie Politique 116 (4): 487–500. https://doi.org/10.3917/redp.164.0487.Suche in Google Scholar

Windmeijer, F. 2005. “A Finite Sample Correction for the Variance of Linear Efficient Two-Step GMM Estimators.” Journal of Econometrics 126: 25–51. https://doi.org/10.1016/j.jeconom.2004.02.005.Suche in Google Scholar

Received: 2024-09-28

Accepted: 2025-03-22

Published Online: 2025-04-22

Published in Print: 2025-06-26

Sie haben derzeit keinen Zugang zu diesem Inhalt.

Artikel in diesem Heft

Frontmatter
Articles
Uncovering the Co-Lender Effect: Resilience and Fragility in the Global Syndicated Lending Network and Impacts on Developing Countries
A Simple Economics of Platform Self-Preferencing

https://doi.org/10.1515/rne-2024-0054

Schlagwörter für diesen Artikel

syndicate loans; shock propagation; systemic banking crises; banks; Covid-19

Artikel in diesem Heft