Author(s):
Iñaki Aldasoro, Sebastian Doerr and Haonan Zhou
Date:
March 2022
Abstract:
Non-bank lenders are an important source of syndicated credit to non-financial corporates in most regions and industries. Their loan origination, however, is more concentrated by location and sector than that of banks and it is also more volatile. Syndicated loans arranged by non-banks carry a significantly higher spread relative to those by banks, consistent with the pattern that firms borrowing from non-banks are more leveraged and less profitable, ie riskier. Non-banks generally grant a smaller share of their new loans to foreign borrowers than banks do. During domestic financial crises, they reduce this share further, exacerbating the global transmission of shocks.