Commit to Disagree: Within-Syndicate Conflict and Syndicated Financing Hiring
Latest studies show you to dual people-that’s, establishments you to additionally hold equity and obligations of the same enterprise-internalize brand new stockholder-collector conflict and you can result in bonus positioning between them events (Jiang et al. Although not, minimization of one’s stockholder-collector disagreement will come at the cost of releasing another conflict among financial institutions. Loan providers holding large guarantee limits inside the debtor agencies possess very other incentives than financial institutions holding very small or no collateral limits. This argument ranging from financial institutions normally hence affect ex-ante loans contracting and you may old boyfriend-article obligations renegotiation. In our previous report, we strive to analyze the perception of conflict away from welfare one of syndicate users created from the dual holding. As the volume of dual-holding has increased, so as well have within-syndicate conflict, which has been growing dramatically for the syndicated financing throughout the You. (more…)