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Journal of Financial Economics Vol. 141 No. 1 2021

Brexit and the contraction of syndicated lending

Tobias Berg1; Anthony Saunders2; Larissa Schäfer1,3; Sascha Steffen1

1 Frankfurt School of Finance & Management · 2 New York University · 3 Center for Economic and Policy Research

Abstract

We document a 24% decline in loan issuances in the UK syndicated loan market after the Brexit vote relative to a set of comparable loan markets. The decline in lending is driven by a pervasive reduction in demand by UK firms. Changes in GDP forecast around the Brexit vote explain about 61% of the decline in lending. We do not find evidence, however, that the United Kingdom loses its attractiveness as a financial center for cross-border lending. Our results point to the resilience of global financial centers in the face of large unexpected shocks.

DOI
10.1016/j.jfineco.2021.03.009
Volume
141
Issue
1
Pages
66-82
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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