The fringe benefits of fringe benefits: When firms borrow from their retirement providers

Connor L. Kasten

Journal of Corporate Finance, 2024, vol. 87, issue C

Abstract: I test whether retirement plan providers extend preferential corporate loan terms to firms that have an overlapping retirement plan relationship. I find that loans from affiliated retirement plan providers (i.e., relationship loans) have lower spreads than non-relationship loans. Relationship loans are also larger and exhibit longer maturities. These terms benefit shareholders without sacrificing the quality of retirement plans available to employees. The favorable terms within this banking relationship are most likely explained by the ability of retirement plan relationships to alleviate information asymmetries in the corporate loan market rather than a quid pro quo arrangement.

Keywords: Retirement plans; Retirement providers; Employee benefits; Corporate loans; Cross-selling; Information asymmetry; Quid pro quo; Relationship banking (search for similar items in EconPapers)
JEL-codes: G21 G32 J32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:87:y:2024:i:c:s0929119924000579

DOI: 10.1016/j.jcorpfin.2024.102595

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