Supervision, Bank Ownership, and Lending Procyclicality: Loan-Level Evidence from Syndicated Lending

This paper studies whether institutional differences across banks shape the procyclicality of credit supply. Using syndicated loan data, I examine how banks adjust their loan shares within the same loan tranche as borrower-country GDP growth changes. The empirical design combines loan-tranche fixed effects with bank-year fixed effects, allowing me to compare lenders facing the same borrower and contract terms while absorbing lender-year shocks. The results show that lending procyclicality is shaped not only by balance-sheet capacity, but also by supervisory discipline and ownership structure. Lead banks are more procyclical, while banks operating under stronger supervisory power are less procyclical. The strongest ownership result is that stakeholder banks, defined as cooperative and savings banks, are substantially less procyclical than other banks. By contrast, state ownership has no robust stabilizing effect, and shareholder-oriented board governance is only weakly associated with greater procyclicality. Overall, the findings suggest that supervision and stakeholder-oriented ownership play important stabilizing roles in the cyclicality of bank credit supply.