Publication Type
Journal Article
Version
submittedVersion
Publication Date
12-2023
Abstract
Does partisanship influence the way investors price financial assets? Using voter registration data of bankers originating large corporate loans, we show that bankers whose party differs from that of the U.S. President charge 7% higher loan spreads than other bankers. This effect holds regardless of borrowers’ partisanship, and becomes stronger for politically active bankers and when partisan media exhibit greater disagreement. Bankers do not match disproportionately with co-partisan borrowers but they lead syndicates more frequently with co-partisan bankers. Our results are not driven by bank or borrower fundamentals, but suggest that investor optimism, driven by political alignment, shapes asset prices.
Keywords
Credit Spreads, Partisanship, Politics, Syndicated Loan Pricing
Discipline
Finance and Financial Management
Research Areas
Finance
Publication
Journal of Financial Economics
Volume
150
Issue
3
First Page
1
Last Page
19
ISSN
0304-405X
Identifier
10.1016/j.jfineco.2023.103717
Publisher
Elsevier
Citation
DAGOSTINO, Ramona; GAO, Janet; and MA, Pengfei.
Partisanship in loan pricing. (2023). Journal of Financial Economics. 150, (3), 1-19.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7308
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jfineco.2023.103717