Underwriter competition and institutional loan pricing

Research output: Working PapersPreprint

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Original languageEnglish
PublisherSocial Science Research Network (SSRN)
Publication statusOnline published - 18 Nov 2022


This paper studies how competition among potential underwriters affects the pricing process of institutional loans. Underwriters trade off between setting the initial loan rates aggressively low in order to win underwriting mandates and having to adjust the rates upward in the book-building process, which heightens the risk of losing borrowers' businesses in the future. We find that the intensity of underwriter competition negatively affects initial loan spreads and is associated with more upward rate adjustments. Using exogenous shocks that reduce banks' ability to underwrite future deals, we find supportive evidence for a causal interpretation.

Research Area(s)

  • Institutional Loans, Underwriter Competition, Relationship Lending, Loan Markets

Citation Format(s)

Underwriter competition and institutional loan pricing. / Liu, Will Shuo; Sun, Zheng; Xiong, Chenyu et al.
Social Science Research Network (SSRN), 2022.

Research output: Working PapersPreprint