Industry contagion in loan spreads

Michael Hertzel, Micah S. Officer

Research output: Contribution to journalArticlepeer-review

81 Scopus citations


Spreads on new and renegotiated corporate loans are significantly higher when the loan originates (or is renegotiated) in the two years surrounding bankruptcy filings by industry rivals. This industry-specific contagion is particularly severe in the middle of industry bankruptcy waves. Furthermore, this contagion in loan spreads is mitigated in concentrated industries, consistent with the hypothesis and evidence in Lang and Stulz (1992) that bankruptcy filings in concentrated industries can have positive consequences for rivals (increased market share and/or power). There is also some evidence that contagion affects non-spread terms in loan contracts.

Original languageEnglish (US)
Pages (from-to)493-506
Number of pages14
JournalJournal of Financial Economics
Issue number3
StatePublished - Mar 1 2012


  • Bankruptcy
  • Contagion
  • Financial distress
  • Loan spreads

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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