Non-pricing drivers of underwriters’ market shares in corporate bond markets

Banks’ role as underwriters has gained relevance, fostering competition for market share in this traditional investment banking activity. This paper explores the effects of competitive pricing and non-pricing factors on banks’ market share as underwriters. Using a panel of active-underwriters in the European corporate bond markets during a highly competitive period (2007–2013), we find that pricing factors are of second-order importance in explaining changes in market shares. Providing joint lending and underwriting services, hiring star-analysts, and being the leader in placing bonds within an industry positively affect market share. These results explain how banks have developed their underwriting businesses.