Free DP Download 17 September 2020 - MEDIA CAPTURE BY BANKS

Thursday, September 17, 2020

Ruben Durante, Andrea Fabiani, José Luis Peydró  
CEPR DP No. 15260 | August 2020

A new CEPR study by Ruben Durante, Andrea Fabiani, and José Luis Peydró finds evidence that links between media companies and the banking sector through credit can significantly influence news content, and threaten media editorial independence when it comes to reporting on financial issues. The study maps the connections between banks and the top newspapers in several European countries and studies how they affect news coverage of two important financial issues:

  • First, newspapers are significantly more likely to cover bank earnings announcements by their lenders, relative to those by other banks, when they report profits than when they report losses. 
    • Such pro-lender bias applies to both general-interest and financial newspapers, and is stronger for newspapers and banks that are more financially vulnerable. 
    • Moreover, pro-lender bias is relatively stronger among newspapers in financial distress, which are more dependent on their creditors. 
    • It also operates more markedly in favour of banks with lower capitalization, which, given their minor loss absorbing capacity, have greater incentives to avoid an extensive coverage of their losses.
  • Second, Bank-media connections also appear to shape the way newspapers report about more general public-interest issues like the Eurobond crisis. The findings show that newspapers connected to banks more exposed to stressed sovereign bonds are more likely to promote a narrative of the crisis favourable to banks and to oppose debt-restructuring measures detrimental to creditors.

Importantly, the connections with banks do not merely affect the way newspapers report about bank-specific events, but can have broader ramifications for the public debate on more general and policy-relevant issues.

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