Portal de Periódicos da CAPES

Mind the Gap: The Difference between U.S. and European Loan Rates

2016; Oxford University Press; Volume: 30; Issue: 3 Linguagem: Inglês

10.1093/rfs/hhw097

1465-7368

Tobias Berg, Anthony Saunders, Sascha Steffen, Daniel Streitz,

Credit Risk and Financial Regulations

We analyze pricing differences between U.S. and European syndicated loans over the 1992–2014 period. We explicitly distinguish credit lines from term loans. For credit lines, U.S. borrowers pay significantly higher spreads, but lower fees, resulting in similar total costs of borrowing in both markets. Credit line usage is more cyclical in the United States, which provides a rationale for the pricing structure difference. For term loans, we analyze the channels of the cross-country loan price differential and document the importance of: the composition of term loan borrowers and the loan supply by institutional investors and foreign banks. Received September 18, 2015; editorial decision July 13, 2016 by Editor Philip Strahan.