Language and private debt renegotiation

Christophe Godlewski

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: We study how language affects private debt renegotiation. We predict that stronger future time reference (FTR) languages alter the importance of renegotiation risk by lowering the perceived value of loan renegotiation. We test this hypothesis on a sample of 6.500 loans issued to European firms between 1999 and 2017. We find that the use of a stronger FTR language decreases renegotiation likelihood and the number of renegotiation rounds. These findings are robust to several FTR proxies, various specifications including loan, borrower and country level variables, and potential mitigation effects from specific loan, country, or time effects. They suggest that linguistic structure influences the renegotiation process of private debt contracts.

Keywords: language; future tense marking; future time reference; bank loan; renegotiation. (search for similar items in EconPapers)
JEL-codes: D83 G20 G41 Z13 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ban and nep-cfn
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Related works:
Journal Article: Language and private debt renegotiation (2025)
Working Paper: Language and Private Debt Renegotiation (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2022-02

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