Companies pay way higher interest on loans if they have more Black and Hispanic bosses, regardless of how good their credit is.
March 24, 2026
Original Paper
Cost of Debt, Cost of Inequity? Racial Discrimination in the Syndicated Loan Market
SSRN · 6401798
The Takeaway
While discrimination in individual mortgages is well-known, this reveals it in the multi-billion dollar syndicated loan market for major corporations. The 'price penalty' for diversity exists even when the firms perform identically to their peers, suggesting that banking bias scales all the way up to the highest levels of corporate finance.
From the abstract
<span>This paper examines whether the racial and ethnic composition of borrowing firms influences the pricing and structure of syndicated bank loans. Using workforce data from Revelio Labs, we find that firms with higher shares of Black and Hispanic senior employees face higher loan spreads after controlling for credit risk, firm characteristics, and loan terms, while finding no evidence of worse post-loan performance. A one standard deviation increase in senior minority representation is associ