Tales that cost: Folklore and bank loan spreads

Christophe Godlewski () and Laurent Weill
Additional contact information
Christophe Godlewski: EM Strasbourg - École de Management de Strasbourg = EM Strasbourg Business School - UNISTRA - Université de Strasbourg, LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg

Post-Print from HAL

Abstract: This paper investigates whether cultural narratives embedded in folklore influence the pricing of syndicated loans. We combine loan-level data for European companies with the cross-cultural dataset of oral traditions compiled by Michalopoulos and Xue (2021) to examine whether stories about risk-taking shape loan spreads. We find that the presence of challenge-related motifs in a lender's cultural background is associated with higher spreads. More specifically, tales that portray unsuccessful outcomes lead to significantly higher loan spreads, while those depicting successful risk-taking have no discernible effect. A greater prevalence of failure over success in challenge-related folklore robustly predicts higher spreads across specifications. These findings suggest that cultural beliefs about risk—transmitted through folklore—affect how lenders perceive borrower uncertainty. By shaping the soft information environment in which credit decisions are made, ancestral narratives continue to influence the terms of modern financial contracts.

Keywords: Culture; Folklore; Bank; Loans (search for similar items in EconPapers)
Date: 2026-01-29
Note: View the original document on HAL open archive server: https://univoak.hal.science/hal-05621409v1
References: Add references at CitEc
Citations:

Published in International Review of Financial Analysis, 2026, 111, pp.105100. ⟨10.1016/j.irfa.2026.105100⟩

Downloads: (external link)
https://univoak.hal.science/hal-05621409v1/document (application/pdf)

Related works:
Journal Article: Tales that cost: Folklore and bank loan spreads (2026)
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:hal:journl:hal-05621409

DOI: 10.1016/j.irfa.2026.105100

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().