Impact of Leveraged Lending Guidance: evidence from nonbank participation in syndicated loans

IF 2 Q2 BUSINESS, FINANCE Journal of Financial Regulation and Compliance Pub Date : 2022-04-20 DOI:10.1108/jfrc-11-2021-0099

Natalya Schenck, Lan Shi

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Abstract

Purpose

The purpose of this study is to examine the impact of supervisory Leveraged Lending Guidance (LLG) (2013–2014) on risk and structure of syndicated loans arranged by the largest US banks with participation of nonbank lenders.

Design/methodology/approach

This study uses supervisory shared national credit loan-level data from 2010 to 2015 and DealScan loan origination data and use linear regressions with clustered standard errors.

Findings

This study finds that the impact of the LLG was mixed. Incidence and risk of leveraged lending declined following the Guidance, as reflected in lower nonbank syndicate participation. However, the covenant protections weakened and loan spreads at origination declined. This study also provides evidence that some risky lending originations shifted to nonbank entities outside of the banking regulatory environment.

Originality/value

This study contributes and expands literature on the impact of regulatory guidance on loan risk, terms and structure, focusing on nonbank participation in syndicated commercial loans.

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杠杆贷款指导的影响:来自非银行机构参与银团贷款的证据

本研究的目的是研究监管杠杆贷款指导(LLG)(2013-2014)对美国最大的银行安排的非银行贷款机构参与的银团贷款的风险和结构的影响。本研究使用2010年至2015年监管共享的国家信贷贷款水平数据和DealScan贷款发放数据，并使用具有聚类标准误差的线性回归。本研究发现，LLG的影响是混合的。根据《指导意见》，杠杆贷款的发生率和风险有所下降，这反映在非银行银团参与的减少上。然而，契约保护减弱了，贷款的初始息差下降了。本研究还提供证据表明，一些风险贷款的来源转移到银行监管环境之外的非银行实体。原创性/价值本研究对监管指导对贷款风险、条款和结构的影响的文献进行了补充和扩展，重点关注非银行机构参与银团商业贷款。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Financial Regulation and Compliance BUSINESS, FINANCE-

CiteScore

2.60

自引率

11.10%

发文量

期刊介绍： Since its inception in 1992, the Journal of Financial Regulation and Compliance has provided an authoritative and scholarly platform for international research in financial regulation and compliance. The journal is at the intersection between academic research and the practice of financial regulation, with distinguished past authors including senior regulators, central bankers and even a Prime Minister. Financial crises, predatory practices, internationalization and integration, the increased use of technology and financial innovation are just some of the changes and issues that contemporary financial regulators are grappling with. These challenges and changes hold profound implications for regulation and compliance, ranging from macro-prudential to consumer protection policies. The journal seeks to illuminate these issues, is pluralistic in approach and invites scholarly papers using any appropriate methodology. Accordingly, the journal welcomes submissions from finance, law, economics and interdisciplinary perspectives. A broad spectrum of research styles, sources of information and topics (e.g. banking laws and regulations, stock market and cross border regulation, risk assessment and management, training and competence, competition law, case law, compliance and regulatory updates and guidelines) are appropriate. All submissions are double-blind refereed and judged on academic rigour, originality, quality of exposition and relevance to policy and practice. Once accepted, individual articles are typeset, proofed and published online as the Version of Record within an average of 32 days, so that articles can be downloaded and cited earlier.