Syndication , Interconnectedness , and Systemic Risk ∗

  title={Syndication , Interconnectedness , and Systemic Risk ∗},
  author={Jian Cai and Anthony Saunders and Sascha Steffen},
This paper studies the interconnectedness of banks in the syndicated loan market as a major source of systemic risk. We develop a set of novel measures to describe the "distance" (similarity) between two banks’syndicated loan portfolios and find that such distance explains how banks are interconnected in this market. As lead arrangers choose to work with those that have a similar focus in terms of lending expertise, there is a high propensity of bank lenders to concentrate syndicate partners… CONTINUE READING

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