Citation

Discussion Paper Details

Please find the details for DP4287 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Multiple Lenders and Corporate Distress: Evidence on Debt Restructuring

Author(s): Antje Brunner and Jan Pieter Krahnen

Publication Date: March 2004

Keyword(s): bank lending, bank pool, bankruptcy, coordination risk, distress and reorganization

Programme Area(s): Financial Economics

Abstract: In the recent theoretical literature on lending risk, the common pool problem in multi-bank relationships has been analysed extensively. In this Paper we address this topic empirically, relying on a unique panel dataset that includes detailed credit-fie information on distressed lending relationships in Germany. In particular, it includes information on bank pools: a legal institution aimed at coordinating lender interests in borrower distress. We find that the existence of small bank pools increases the probability of workout success and that coordination costs are positively related to pool size. We identify major determinants of pool formation, in particular the distribution of lending shares among banks, the number of banks, and the severity of the distress shock to the borrower.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4287

Bibliographic Reference

Brunner, A and Krahnen, J. 2004. 'Multiple Lenders and Corporate Distress: Evidence on Debt Restructuring'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4287