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Session 3.23: Do Lenders Price Firms’ Cybersecurity Risks?
Time:
Wednesday, 27/Aug/2025:
4:30pm - 5:00pm
Location:Mikado Conference hall
Meeting hall “Mikado”, which can accommodate up to 50 people
Presentations
Do Lenders Price Firms’ Cybersecurity Risks?
Prof. BOK MIN CHOI, Prof. Hans Degryse, Prof. Kristien Smedts
KU Leuven, Belgium
Firms are increasingly exposed to cybersecurity risks. We examine whether lenders recognize and accordingly price firms’ cybersecurity risks. Our findings indicate that lenders on average charge a 4 to 12 basis points higher loan rate when a firm exhibits greater cybersecurity risk over time. Commercial banks tend to adopt a more stringent approach to pricing cybersecurity risks compared to non-bank lenders. Finally, the purchase of cybersecurity insurance by a firm does not mitigate the higher loan spreads associated with elevated cybersecurity risks.
