Tian, Suhua; Yang, Yunhong; Zhang, Gaiyan - In: Journal of Banking & Finance 37 (2013) 8, pp. 2765-2778
This paper develops a theoretical framework in which asset linkages in a syndicated loan agreement can infect a healthy bank when its partner bank fails. We investigate how capital constraints affect the choice of the healthy bank to takeover or liquidate the exposure held jointly with the...