This paper investigates the influence of creditor control rights on the pricing of corporate loans. We construct a novel dataset, which combines hand-collected covenant violations data with individual borrower, creditor, and loan contract information. Our data allows us to distinguish between creditors that receive direct control rights after a covenant violation and creditors that do not receive control rights after a violation. By comparing the loan terms of these two creditor types, we can isolate the impact of creditor control rights on loan pricing from the impact of other factors related to a covenant violation. We find that creditors exploit control rights to overprice new loans, which is a key determinant of the loan premium puzzle. In addition, we uncover novel cross-sectional and time-series loan pricing patterns that can be explained by creditor control rights.

We examine whether banks manage climate transition risk by securitizing corporate loans. We present two novel results. First, banks are more likely to securitize loans when borrowers increase their carbon emission intensity. Second, securitization serves as a vehicle to shift transition risk, especially when banks do not have market power to price transition risk into loan contracts. Exploiting the Trump election as an exogenous shock to transition risk, we establish a causal link between transition risk and loan securitization. Our estimates show stronger effects for banks that do not exhibit preference for sustainable lending and domestic lenders. We discuss how our paper speaks to the debate on the design of bank climate policies.

This paper studies how the California Consumer Privacy Act (CCPA), a comprehensive privacy law that grants users control over their data, affects fintech lending. To develop hypotheses we build a parsimonious screening model. Consumers apply for loans with banks and a fintech that has a superior but data-intensive screening technology. However, consumers dislike sharing their data, and in particular with the fintech. We empirically show that the introduction of the CCPA, by assuaging concerns about data sharing, increases mortgage applications with fintechs relative to banks. Consistent with applicants' greater willingness to share data, fintechs make greater use of non-traditional data to improve screening. In turn, they deny more applications and can offer lower interest rates.