Operations in Offshore Financial Centers and Loan Syndicate Structure

• In Event: Debt Financing and Debt Contracting

Abstract

This paper examines the effects of firm operations in offshore financial centers (OFC) on loan syndicate structure. We find that firms’ OFC operations have a significant and positive effect on the concentration of a loan syndicate, and the involvement of reputable lenders in a loan syndicate can mitigate this positive relation. We also find that loan syndicate concentration is negatively associated with the presence of lenders located in OFCs, and lenders’ prior OFC experience. Our results are robust using matched control samples and a sample of loans borrowed by U.S. firms.

Authors

• Yutao Li, University of Lethbridge

• Wenxia Ge, University of Manitoba

• Jeong-bon Kim, City University of Hong Kong

• Tiemei Li, University of Ottawa