Discussion paper

DP11653 Pricing the Odious in Odious Debts

This paper exploits a unique historical episode to quantify the impact of ethics on sovereign bond prices. In 1906 the Russian government floated a bond in Paris to cover the costs of its war against Japan but also to raise money to crush the political movements wishing to reform Russia’s political system. Issued without parliamentary consent, this loan met with fierce opposition. Press campaigns in Great Britain, France and Germany denounced its odious character. Using an original database this paper shows that market participants required a substantial premium to hold the “unethical” odious bond. This premium was especially high when the bond was issued, and protests and campaigns were waged against it. The premium diminished once the press campaigns stopped. It remained nonetheless significant, suggesting that ethics have a lasting effect on investors’ willingness to buy odious bonds.


Oosterlinck, K and S Collet (2016), ‘DP11653 Pricing the Odious in Odious Debts‘, CEPR Discussion Paper No. 11653. CEPR Press, Paris & London. https://cepr.org/publications/dp11653