Why do banks join loan syndications? The case of participant banks

This paper examines the determinants of banks' involvement in loan syndication using the financial information of 847 participant banks. The results indicate that participant banks join loan syndications when their capital levels are sufficient enough to support the extra risk taken. Banks with lower net interest margin are found to choose syndicated lending as a way of boosting their margins. The motivation of risk diversification through participating in loan syndications is also confirmed.