Discussion paper
DP15260 Media Capture by Banks
We show that media slant news in favor of their lenders, exploiting data on news coverage of key financial events in major European newspapers and information on bank-firm loan connections. First, newspapers cover earning announcements by their lenders more (relative to other banks’) when they report profits than when they report losses. Second, newspapers cover more favorably bank M&As involving their lenders as acquirers. Third, newspapers connected to banks more exposed to stressed sovereign bonds tend to endorse a pro-banks narrative of the Eurozone crisis and oppose debt-restructuring measures. Across all events, less capitalized banks benefit more from slanted coverage.
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