No Cover Image

Journal article 52 views 13 downloads

Gambling preference, information risk, and the pricing of bank loans

Samar S. Alharbi, Md Al Mamun, Nader Atawnah, Sabri Boubaker Orcid Logo

The European Journal of Finance, Pages: 1 - 30

Swansea University Author: Sabri Boubaker Orcid Logo

  • 67518.VoR.pdf

    PDF | Version of Record

    © 2024 The Author(s). This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License.

    Download (2.37MB)

Check full text

DOI (Published version): 10.1080/1351847x.2024.2404088

Abstract

Our study explores the effect of local gambling preferences (LGP) on bank loan pricing, revealing that lenders impose significantly higher interest rates on firms situated in areas characterized by stronger gambling tendencies. Our results remain robust after conducting a series of sensitivity tests...

Full description

Published in: The European Journal of Finance
ISSN: 1351-847X 1466-4364
Published: Informa UK Limited 2024
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa67518
Tags: Add Tag
No Tags, Be the first to tag this record!
first_indexed 2024-10-30T13:24:24Z
last_indexed 2024-10-30T13:24:24Z
id cronfa67518
recordtype SURis
fullrecord <?xml version="1.0" encoding="utf-8"?><rfc1807 xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xmlns:xsd="http://www.w3.org/2001/XMLSchema"><bib-version>v2</bib-version><id>67518</id><entry>2024-09-02</entry><title>Gambling preference, information risk, and the pricing of bank loans</title><swanseaauthors><author><sid>43999fff86cd8a29f4815fb4dfa47729</sid><ORCID>0000-0002-6416-2952</ORCID><firstname>Sabri</firstname><surname>Boubaker</surname><name>Sabri Boubaker</name><active>true</active><ethesisStudent>false</ethesisStudent></author></swanseaauthors><date>2024-09-02</date><deptcode>CBAE</deptcode><abstract>Our study explores the effect of local gambling preferences (LGP) on bank loan pricing, revealing that lenders impose significantly higher interest rates on firms situated in areas characterized by stronger gambling tendencies. Our results remain robust after conducting a series of sensitivity tests that account for firm-, county-, and loan-specific attributes, as well as several identification robustness checks. Specifically, our relocation analysis shows that firms moving to areas with higher (lower) gambling preferences experience higher (lower) costs of bank loans compared to control groups. Our channel analysis further reveals that local gambling preferences exacerbate a firm's information risk environment, as captured by poorer earnings quality, heightened earnings risk, and greater managerial concealment of bad news, resulting in higher borrowing costs. Finally, we observe that firms in areas with higher LGP encounter more stringent non-price loan terms. However, institutional ownership and the threat of takeovers significantly mitigate the adverse effect of LGP on bank loan pricing.</abstract><type>Journal Article</type><journal>The European Journal of Finance</journal><volume>0</volume><journalNumber/><paginationStart>1</paginationStart><paginationEnd>30</paginationEnd><publisher>Informa UK Limited</publisher><placeOfPublication/><isbnPrint/><isbnElectronic/><issnPrint>1351-847X</issnPrint><issnElectronic>1466-4364</issnElectronic><keywords>Cost of bank loans; local gambling preference; corporate governance; information risk</keywords><publishedDay>3</publishedDay><publishedMonth>10</publishedMonth><publishedYear>2024</publishedYear><publishedDate>2024-10-03</publishedDate><doi>10.1080/1351847x.2024.2404088</doi><url/><notes/><college>COLLEGE NANME</college><department>Management School</department><CollegeCode>COLLEGE CODE</CollegeCode><DepartmentCode>CBAE</DepartmentCode><institution>Swansea University</institution><apcterm/><funders>This work was supported by United Arab Emirates University.</funders><projectreference/><lastEdited>2024-10-30T13:27:15.1998135</lastEdited><Created>2024-09-02T15:09:36.4796940</Created><path><level id="1">Faculty of Humanities and Social Sciences</level><level id="2">School of Management - Accounting and Finance</level></path><authors><author><firstname>Samar S.</firstname><surname>Alharbi</surname><order>1</order></author><author><firstname>Md Al</firstname><surname>Mamun</surname><order>2</order></author><author><firstname>Nader</firstname><surname>Atawnah</surname><order>3</order></author><author><firstname>Sabri</firstname><surname>Boubaker</surname><orcid>0000-0002-6416-2952</orcid><order>4</order></author></authors><documents><document><filename>67518__32796__5000f7ef4b3c402cb469fe1673bb7598.pdf</filename><originalFilename>67518.VoR.pdf</originalFilename><uploaded>2024-10-30T13:24:54.4749321</uploaded><type>Output</type><contentLength>2483512</contentLength><contentType>application/pdf</contentType><version>Version of Record</version><cronfaStatus>true</cronfaStatus><documentNotes>© 2024 The Author(s). This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License.</documentNotes><copyrightCorrect>true</copyrightCorrect><language>eng</language><licence>http://creativecommons.org/licenses/by-nc-nd/4.0/</licence></document></documents><OutputDurs/></rfc1807>
spelling v2 67518 2024-09-02 Gambling preference, information risk, and the pricing of bank loans 43999fff86cd8a29f4815fb4dfa47729 0000-0002-6416-2952 Sabri Boubaker Sabri Boubaker true false 2024-09-02 CBAE Our study explores the effect of local gambling preferences (LGP) on bank loan pricing, revealing that lenders impose significantly higher interest rates on firms situated in areas characterized by stronger gambling tendencies. Our results remain robust after conducting a series of sensitivity tests that account for firm-, county-, and loan-specific attributes, as well as several identification robustness checks. Specifically, our relocation analysis shows that firms moving to areas with higher (lower) gambling preferences experience higher (lower) costs of bank loans compared to control groups. Our channel analysis further reveals that local gambling preferences exacerbate a firm's information risk environment, as captured by poorer earnings quality, heightened earnings risk, and greater managerial concealment of bad news, resulting in higher borrowing costs. Finally, we observe that firms in areas with higher LGP encounter more stringent non-price loan terms. However, institutional ownership and the threat of takeovers significantly mitigate the adverse effect of LGP on bank loan pricing. Journal Article The European Journal of Finance 0 1 30 Informa UK Limited 1351-847X 1466-4364 Cost of bank loans; local gambling preference; corporate governance; information risk 3 10 2024 2024-10-03 10.1080/1351847x.2024.2404088 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University This work was supported by United Arab Emirates University. 2024-10-30T13:27:15.1998135 2024-09-02T15:09:36.4796940 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Samar S. Alharbi 1 Md Al Mamun 2 Nader Atawnah 3 Sabri Boubaker 0000-0002-6416-2952 4 67518__32796__5000f7ef4b3c402cb469fe1673bb7598.pdf 67518.VoR.pdf 2024-10-30T13:24:54.4749321 Output 2483512 application/pdf Version of Record true © 2024 The Author(s). This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License. true eng http://creativecommons.org/licenses/by-nc-nd/4.0/
title Gambling preference, information risk, and the pricing of bank loans
spellingShingle Gambling preference, information risk, and the pricing of bank loans
Sabri Boubaker
title_short Gambling preference, information risk, and the pricing of bank loans
title_full Gambling preference, information risk, and the pricing of bank loans
title_fullStr Gambling preference, information risk, and the pricing of bank loans
title_full_unstemmed Gambling preference, information risk, and the pricing of bank loans
title_sort Gambling preference, information risk, and the pricing of bank loans
author_id_str_mv 43999fff86cd8a29f4815fb4dfa47729
author_id_fullname_str_mv 43999fff86cd8a29f4815fb4dfa47729_***_Sabri Boubaker
author Sabri Boubaker
author2 Samar S. Alharbi
Md Al Mamun
Nader Atawnah
Sabri Boubaker
format Journal article
container_title The European Journal of Finance
container_volume 0
container_start_page 1
publishDate 2024
institution Swansea University
issn 1351-847X
1466-4364
doi_str_mv 10.1080/1351847x.2024.2404088
publisher Informa UK Limited
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 1
active_str 0
description Our study explores the effect of local gambling preferences (LGP) on bank loan pricing, revealing that lenders impose significantly higher interest rates on firms situated in areas characterized by stronger gambling tendencies. Our results remain robust after conducting a series of sensitivity tests that account for firm-, county-, and loan-specific attributes, as well as several identification robustness checks. Specifically, our relocation analysis shows that firms moving to areas with higher (lower) gambling preferences experience higher (lower) costs of bank loans compared to control groups. Our channel analysis further reveals that local gambling preferences exacerbate a firm's information risk environment, as captured by poorer earnings quality, heightened earnings risk, and greater managerial concealment of bad news, resulting in higher borrowing costs. Finally, we observe that firms in areas with higher LGP encounter more stringent non-price loan terms. However, institutional ownership and the threat of takeovers significantly mitigate the adverse effect of LGP on bank loan pricing.
published_date 2024-10-03T13:27:13Z
_version_ 1814345635414933504
score 11.037166

Similar Items