In 1998, the Syndicated Bank Loan market (defined as loans having more than two

Question

In 1998, the Syndicated Bank Loan market (defined as loans having more than two bank lenders)
was a vast and cheap source of debt financing for U.S. corporations. This market was characterized
by a large number of financial institutions that aggressively committed capital to debt issuers
as a way to build market share and increase earnings.
Over the next three years, however, syndicated loan prices increased dramatically while the
quantity of these loans declined. The price increase, measured as a markup over the cost of funds
or LIBOR (London Interbank Offered Rate), is illustrated in the figure labeled

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