Operations in offshore financial centers and loan syndicate structure

This study examines whether a firm's subsidiary operations in offshore financial centers (OFCs) affect loan syndicate structure. We find that as borrowers engage more aggressively in operations in OFCs, lead lenders of a loan syndicate hold a larger percentage of loans to such firms and the number of lenders participating in a loan syndicate becomes smaller. This finding is robust to various robustness tests including propensity score matching analysis and quasi-natural experiment. Furthermore, we find that lead lender reputation and prior lending relationship with the borrower can attenuate the positive relation between OFC operations and loan syndicate concentration.