Alves, Paulo P.Cunha, M. RicardoPacheco, Luís K.Pinto, João M.2021-06-212022-01-012022-12-010920-8550http://hdl.handle.net/10400.14/33800This paper examines which factors determine the pricing of loans for LBOs, using a worldwide sample of 11,111 loans closed in the 2000–2016 period. Our findings are consistent with the hypotheses that loans for LBOs extended to borrowers in market- versus bank-based financial systems are differently priced, and that law and institutional characteristics are important determinants of spreads for deals closed in market-oriented countries. Despite LBO loan pricing differing significantly in normal versus crisis times, loans extended to borrowers in market-based financial systems have higher spreads than those where banks play a major role. Our results also support the hypothesis of tranching as a mechanism of reducing spreads by completing financial markets and mitigating informational asymmetries. Finally, a robust convex relationship between spread and maturity is found, suggesting higher market competition by banks and investors for standard, medium-term maturities.engLoan pricingLBOsFinancial crisisMarket-basedTerm structure of spreadsjournal article10.1007/s10693-021-00355-y85106405640000653117200001