Europe vs. the U.S.: A new look at the syndicated loan pricing puzzle

- The syndicated loan pricing puzzle points out lower-priced loans in Europe than in the U.S.
- We solve the puzzle using region-specific credit ratings.
- Differences in local accounting standards compromise the uniformity of credit ratings.

According to the syndicated loan pricing puzzle (Carey and Nini, 2007) interest rates charged to corporate borrowers are lower in Europe than in the U.S. Our investigation suggests that controlling for region-specific credit ratings makes the Europe-U.S. gap insignificant, and solves the puzzle. We speculate that the puzzle originates from the lack of uniformity of accounting standards.