A foreign currency effect in the syndicated loan market of emerging economies

Factors Affecting Syndicated Loan Spreads in Indonesia, Thailand, and Vietnam

“…However, in model 3, loan maturity has no significant effect on syndicated loan spreads. This is in line with Di Gong et al [3] and Paligorova and Santos [28], who reveal that longer loan maturities are associated with greater credit risk and lower liquidity in the underlying projects. However, they might be demanded by large firms that carry a lower risk, causing the relationship between loan maturity and loan price to be ambiguous.…”

“…In regression models 1, 2, and 3, the loan amount has no significant effect on the syndicated loan spreads. These results are supported by Di Gong et al [3] research. Large loan amounts have greater credit risk and concentration.…”

“…In 2020, in line with Gurara et al [13], Wang et al [8] state that loan amount has a significant negative effect on loan spreads. It should be noted that loans in large amounts are generally only given by creditors to large companies whose risks are relatively lower [3]. In contrast to the studies above, Champagne and Kryzanowski [9] posit that loan amount has a significant positive effect on loan spreads.…”

“…This can be made possible as the lending activities are only represented by one lender, unlike the other types of loans [2]. This makes syndicated loans an increasingly important source of funding, especially for borrowers in developing countries [3]. However, only a few studies have been conducted on it in developing countries.…”

“…However, only a few studies have been conducted on it in developing countries. Some of which are in Africa, Latin America, Southeast Asia, North Asia, and China [1,3,4]. This is understandable as the largest markets for syndicated loans are located in the US and Western Europe [5,6].…”