EconPapers    
Economics at your fingertips  
 

The diplomacy discount in global syndicated loans

Gene Ambrocio, Xian Gu, Iftekhar Hasan () and Panagiotis Politsidis

Journal of International Money and Finance, 2022, vol. 120, issue C

Abstract: This paper investigates whether state-to-state political ties with the United States affect the pricing of global syndicated loans. We find that a one-standard-deviation improvement in state political ties between the U.S. and the government of a borrower’s home country is associated with a 14.7 basis points lower loan spread, shaving off about 11.8 million USD in interest payments over the duration of the average loan for borrowers. Results also show that the effect of political ties is stronger for narrower and more concentrated loan syndicates, when lead arrangers are U.S. banks, during periods in which the U.S. is engaged in armed conflicts, when the U.S. president belongs to the Republican Party, and for borrowers with better balance sheets and prior lending relationships. Notably, not all firms benefit equally, as cross-listed firms and firms in countries with strong institutional quality and ability to attract institutional investors are much less affected by political ties.

Keywords: Global syndicated loans; Loan pricing; Political ties; International relations (search for similar items in EconPapers)
JEL-codes: F50 G15 G21 G30 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560621001935
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The diplomacy discount in global syndicated loans (2022)
Working Paper: The Diplomacy Discount in Global Syndicated Loans (2020) Downloads
Working Paper: The Diplomacy Discount in Global Syndicated Loans (2020) Downloads
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:jimfin:v:120:y:2022:i:c:s0261560621001935

DOI: 10.1016/j.jimonfin.2021.102542

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-09-29
Handle: RePEc:eee:jimfin:v:120:y:2022:i:c:s0261560621001935