Geopolitical risk and the cost of bank loans

Thanh Cong Nguyen and Tien Ho Thuy

Finance Research Letters, 2023, vol. 54, issue C

Abstract: We examine the relation between geopolitical risk and the cost of bank loans using a sample of 31,004 loan facilities in the US over the period 1991–2019. We show that geopolitical risk is associated with higher loan prices and more stringent nonprice loan terms. With one standard deviation increase in the geopolitical risk index, the average cost of bank loans increases by 7.253 basis points. Delving into the components of geopolitical risk, we find that the effects of geopolitical acts on the cost of bank loans and nonprice loan terms are more pronounced than those of geopolitical threats.

Keywords: Geopolitical risk; Loan pricing (search for similar items in EconPapers)
JEL-codes: D81 G30 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S154461232300185X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s154461232300185x

DOI: 10.1016/j.frl.2023.103812

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().