COLLATERALIZATION AND THE NUMBER OF LENDERS IN PRIVATE DEBT CONTRACTS: AN EMPIRICAL ANALYSIS

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.

Citation

Roberts, G.S. and Siddiqi, N.A. (2005), "COLLATERALIZATION AND THE NUMBER OF LENDERS IN PRIVATE DEBT CONTRACTS: AN EMPIRICAL ANALYSIS", Research in Finance (Research in Finance, Vol. 21), Emerald Group Publishing Limited, Leeds, pp. 229-252. https://doi.org/10.1016/S0196-3821(04)21010-3