Collateralization and the Number of Lenders in Private Debt Contracts: An Empirical Analysis

Research in Finance, Forthcoming

Posted: 8 Jul 2004

See all articles by Nadeem A. Siddiqi

Nadeem A. Siddiqi

Independent

Gordon S. Roberts

York University - Schulich School of Business

Abstract

Using the Dealscan database of large, U.S. corporate loans, we examine the determinants of the number of bank relationships and the presence or absence of collateral. Consistent with prior studies, we find that important explanatory variables are firm quality, desire for financial flexibility, the probability of financial distress, growth opportunities and firm size. Higher quality firms as well as firms with a stronger desire for financial flexibility are less likely to collateralize and borrow from more lenders. Larger firms as well as those with lower probabilities of financial distress and greater growth opportunities prefer multiple lenders.

Keywords: Bank lending, loan contracts

JEL Classification: G21, G22, G23, G32

Suggested Citation

Siddiqi, Nadeem A. and Roberts, Gordon S., Collateralization and the Number of Lenders in Private Debt Contracts: An Empirical Analysis. Research in Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=562519

Gordon S. Roberts

York University - Schulich School of Business ( email )

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