Mind the Gap: The Difference between U.S. and European Loan Rates

Tobias Berg, Anthony Saunders, Sascha Steffen, Daniel Streitz

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    We analyze pricing differences between U.S. and European syndicated loans over the 1992–2014 period. We explicitly distinguish credit lines from term loans. For credit lines, U.S. borrowers pay significantly higher spreads, but lower fees, resulting in similar total costs of borrowing in both markets. Credit line usage is more cyclical in the United States, which provides a rationale for the pricing structure difference. For term loans, we analyze the channels of the cross-country loan price differential and document the importance of: the composition of term loan borrowers and the loan supply by institutional investors and foreign banks.
    Original languageEnglish
    JournalThe Review of Financial Studies
    Issue number3
    Pages (from-to)948-987
    Number of pages40
    Publication statusPublished - Mar 2017


    • G30
    • G20
    • G15

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