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

Author

Listed:
  • Manthos Delis

    (Audencia Business School)

  • Iftekhar Hasan

    (Fordham University [New York])

  • Thomas To

    (The University of Sydney)

  • Eliza Wu

    (The University of Sydney)

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.

Suggested Citation

  • Manthos Delis & Iftekhar Hasan & Thomas To & Eliza Wu, 2024. "The bright side of bank lobbying: Evidence from the corporate loan market," Post-Print hal-04585664, HAL.
    • Handle: RePEc:hal:journl:hal-04585664
    Note: View the original document on HAL open archive server: https://hal.science/hal-04585664
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    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;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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