Why do banks syndicate credit? A closer look at risk and specialisation (Steven Ongena)

Steven Ongena, Professor at the University of Zurich and the Swiss Finance Institute, presents research co-authored with Alex Osberghaus (University of Zurich) and Glenn Schepens (European Central Bank) on the motivations behind bank syndication of credit. The study examines the conditions under which banks choose to syndicate loans rather than provide bilateral credit, focusing on factors such as bank capitalisation, industry specialisation, and firm risk. Combining two data sets, Ongena reveals how syndication serves as a sidestep for weaker, less specialized banks dealing with higher-risk firms, challenging traditional views of syndication as a graduation step towards bond issuance.
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