The bright side of bank lobbying: Evidence from the corporate loan market

Manthos Delis, Iftekhar Hasan, Thomas To () and Eliza Wu
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Manthos Delis: Audencia Business School
Thomas To: The University of Sydney

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Abstract: Bank lobbying has a bitter taste in most forums, ringing the bell of preferential treatment of big banks from governments and regulators. Using corporate loan facilities and hand-matched information on bank lobbying from 1999 to 2017, we show that lobbying banks increase their borrowers' overall performance. This positive effect is stronger for opaque and credit-constrained borrowers, when the lobbying lender possesses valuable information on the borrower, and for borrowers with strong corporate governance. Our findings are consistent with the theory positing that lobbying can provide access to valuable lender-borrower information, resulting in improved efficiency in large firms' corporate financing.

Keywords: JEL classification: D72 G21 G30 Bank lobbying Firm performance Syndicated loans Information-transmission theory Opaque firms; JEL classification: D72; G21; G30 Bank lobbying; Firm performance; Syndicated loans; Information-transmission theory; Opaque firms (search for similar items in EconPapers)
Date: 2024-05-23
New Economics Papers: this item is included in nep-ban and nep-cfn
Note: View the original document on HAL open archive server: https://hal.science/hal-04585664v1
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Published in Journal of Corporate Finance, 2024, 86 (102591)

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Journal Article: The bright side of bank lobbying: Evidence from the corporate loan market (2024)
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