Conference Agenda

This paper examines whether geopolitical risk affects the pricing and terms of

bank lending in the euro area. We construct a novel country-level measure of geopo

litical risk using multilingual news coverage from the Global Database of Events,

Language, and Tone (GDELT), and map it to individual banks based on the ge

ographic composition of their pre-war lending portfolios. Exploiting the outbreak

of the Russia–Ukraine war in February 2022 as an exogenous shock, we estimate a

difference-in-differences model using newly originated loans from the ECB’s Ana

Credit credit registry. We find that banks with higher geopolitical risk exposure

charge higher interest rates on new loans following the shock. A one-standard

deviation increase in exposure is associated with an increase in lending rates of

approximately 2.9 basis points. More exposed banks also shorten loan maturities,

while we find no robust evidence of adjustments in loan size or collateralisation.

These findings suggest that geopolitical risk is reflected in the terms of newly orig

inated bank credit, operating primarily through pricing and maturity adjustments.

We document an active secondary market for shares in syndicated term loans using confidential supervisory data. While most of the literature examines trades near origination, we study the secondary market throughout the life of a syndicated loan. We establish novel empirical facts about the post-origination trading of loan shares and identify key participants and their trading patterns. We characterize the determinants of an active secondary market, the turnover of lender shares, and of the resulting credit exposure allocations. Gross and net flow decompositions reveal that mutual funds are net sellers and CLOs are net buyers, with banks intermediating on both sides and hedge funds becoming more active when liquidity deteriorates and credit risk increases.

Tight monetary policy may not bring immediate outcomes in high inflation episodes. Unaccommodating regulations which do not fully align with tight monetary policy are likely to delay disinflation. This paper examines the impact of prepayment penalties in the term structure of commercial loan interest rates, by exploiting a regulation revision in Türkiye that amended prepayment penalties across varying maturities. Using administrative micro data over 1.5 million loan contracts, our findings indicate that the amendment of prepayment penalties lowers interest rates of long-term maturities compared to the ones of short-term maturities at a range between 2-8%. This effect is almost flat across firm type but varied with differing bank characteristics. Our results imply that the amendment improves the functioning of bank lending channel in commercial loan segment which is helpful to achieve disinflation.

Using administrative data from the Shared National Credit (SNC) program, we document systematic downward drift in loan ratings that are predictable from pre-issuance borrower and loan characteristics, suggesting that ratings do not fully incorporate screening and pricing information. We exploit the conditionally random assignment of loan examinations and find that supervision increases the timeliness of examined loans' ratings and spills over within banks' portfolios, consistent with learning. We investigate counterfactual capital ratios under different degrees of informational efficiency and offer new insights about the role of supervision in banks' internal credit assessments and capital cyclicality.