Asymmetric information amplifies borrowing costs: BIS paper


A Bank for International Settlements paper, published on Friday, shows that participant banks with information inferiority are charged higher spreads than more senior borrrowers, with the effect amplified for more opaque borrowers.

Blaise Gadanecz, Alper Kara and Philip Molyneux, the paper's authors, use a sample of 5,842 syndicated loan transactions between 1993 and 2006 to capture the effects of information asymmetries in the syndicated loan market, taking into account the previous number of

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