Graduation Year

Fall 2011

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Manfred Keil

Reader 2

Gregory Hess

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2011 Kevin T. Sullivan

Abstract

The financial crisis of 2008 had systemic implications in the financial services industry spilling over into sectors such as the leverage loan market. I use regression analysis between two data sets (before and after the crisis) to understand the determinants of loan spreads for corporate loans of $100 million and larger, particularly the determinants which constitute bank effects, of the lead lending bank in the loan. I find that the effect of bank monitoring power is not a significant determinant of loan spreads, bank risk was significant before the crisis but not after, and bank size is significant both before and after. There is an inverse relationship between bank size and loan spread such that firms looking to take out a loan would receive a lower spread by mandating a larger bank as the lead arranger, and there is no longer a premium for mandating lead banks with less risk.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff. It is not available for interlibrary loan. Please send a request for access through Contact Us.

Share

COinS