Investor diversity and liquidity in the secondary loan market

Research output: Contribution to journalArticlepeer-review


We find strong evidence that investor diversity is beneficial to loan liquidity: More diverse syndicates, as measured by the number of investor-types or the concentration of loan shares by investor-type, hold loans that have lower quoted bid-ask spreads in the secondary market. These results are robust, and do not appear to be driven by investors’ borrower/loan selection. Further, they are not driven by the presence of any particular type of investors. Our findings are consistent with Goldstein and Yang (J Financ 70:1723–1765 2015) insight that there is a strategic complementarity between different groups in trading on their information and producing information.

Original languageEnglish
Pages (from-to)249-272
JournalJournal of Financial Services Research
Publication statusPublished - Jun 2023


  • Informed investors
  • Investor diversity
  • Loan bid-ask spreads
  • Loan market liquidity
  • Loan syndicate


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