Information asymmetry in banking law, case study (syndicated loans contracts)

Accessing to correct and reliable information is necessary for commercial activities. In a trade market,when one of the parties in comparison with others has more or lessinformation, the information asymmetryoccurs, which may lead to thefailure ofthe market.one of the main markets is the monetary and bankingmarket, where the financial and economicinformation has more significance among other markets.Information asymmetry in this market may lead to destructive effects.One of themost important topics offinancial and banking marketsisfacilitiesgrantedby thebanks. Syndicated loans are facilities prepared and paid to applicant by two or more than two bank or credit institutesjointly. This facilities are organized in such a manner that may be associated withthe problem ofinformation asymmetry.In this article we analytically examinedthestructure of this loans and the probability of information asymmetry and moral hazard and adverse selection. We foundedthat there may be information asymmetrybetweenthe syndicate members and agent and leader banks As well as between the applicant andthe syndicatemembers. Finally Inorder topreventinformation asymmetryand its consequences we proposed some offers.