Global Loan Supply and Contracting during the Crises: Evidence from the Financial Development of Countries

This paper studies the negative impact of the financial crises on the international bank loan market during the last four decades, focusing on the lending contracting of banks. Using a sample of 77,713 firm-year observations of syndicated loans from 46 countries during the period of 1985-2015, we find that loan spreads as well as covenant and collateral requirements significantly increased while loan size and maturity significantly reduced during the financial crises. Our further findings suggest that the effect of the financial crisis on bank lending was mitigated in countries with a higher level of financial development.