Tranching in the syndicated loan market around the world

Research output: Contribution to journalArticlepeer-review


  • Douglas Cumming
  • Florencio Lopez-de-Silanes
  • Joseph A McCahery
  • Armin Schwienbacher

External organisations

  • Universite Cote d'Azur
  • Tilburg University


Loan tranching allows banks to manage risk and facilitate firm financing, which may be essential for firms that cannot access investors from stock markets. We analyze the determinants and benefits of loan tranching by pooling the tranches of individual loans to create the largest cross-country sample of syndicated loans, covering more than 150,000 loans from multinational and domestic firms. We find that, in addition to market, deal, and borrower characteristics, legal and institutional differences impact loan tranching. Strong creditor protection and efficient debt collection increase the probability of tranching and reduce tranche spreads, ultimately promoting firms’ access to debt. We also find evidence that tranching facilitates the financing of multinational firms abroad due to the transfer of legal and cultural institutions to foreign subsidiaries. Overall, our results suggest that tranching plays an important role in reducing a country’s financial development gap and promotes firms’ access to debt.


Original languageEnglish
Pages (from-to)95–120
Number of pages26
JournalJournal of International Business Studies
Early online date4 Jul 2019
Publication statusPublished - Feb 2020


  • financial contracting, tranche, Synapses, loan enforcement, liability of foreignness, multiple regression analysis