The Maturity of Syndicated Loans Originated in Japan

I estimated a model that addresses the maturity of syndicated loans originated in Japan, employing a sample of 126 facilities. I found a negative relationship between maturity and the existence of credit rating and loan size, consistent with the Diamond s (1991b) liquidity risk hypothesis that firms that face potential inefficient liquidation lengthen the maturity of their debt. I also found evidence that the national identity of the arranging bank influences the maturity of syndicated loans. As the arranging bank is a local (i.e. Japanese) bank, its maturity is lengthened. I also found that loan maturity increases with the number of lenders within a syndicate, implying that Japanese borrowers prefer to have longer-term loans when the prospect for loan re-negotiability is reduced. Finally, I found that loan type and loan purpose influence the loan maturity.