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Forward Guidance and Corporate Lending

Delis, M.D.; Hong, S.; Paltalidis, N.; Philip, D.

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M.D. Delis

S. Hong


We suggest that forward guidance, via publicly committing the central bank to future actions and creating associated expectations, fundamentally affects bank lending decisions independently of other forms of monetary policy. To test this hypothesis, we build a forward guidance measure based on the language used in the Federal Open Market Committee meetings and match this measure with syndicated loans. Our results show that expansionary forward guidance decreases corporate loan spreads and that this effect is stronger for well-capitalized banks lending to riskier firms. Forward guidance also affects nonprice lending terms, such as covenants, performance pricing provisions, and the loan syndicate structure. Additionally, banks tend to initiate new lending relationships with lower spreads after forward guidance issuance.


Delis, M., Hong, S., Paltalidis, N., & Philip, D. (2022). Forward Guidance and Corporate Lending. Review of Finance, 26(4), 899-935.

Journal Article Type Article
Acceptance Date Sep 1, 2021
Online Publication Date Sep 22, 2021
Publication Date 2022-07
Deposit Date Sep 6, 2021
Publicly Available Date Sep 23, 2023
Journal Review of Finance
Print ISSN 1572-3097
Electronic ISSN 1573-692X
Publisher Oxford University Press
Peer Reviewed Peer Reviewed
Volume 26
Issue 4
Pages 899-935
Public URL


Accepted Journal Article (1 Mb)

Copyright Statement
This is a pre-copyedited, author-produced version of an article accepted for publication in Review of Finance following peer review. The version of record: Delis, M. D., Hong, S., Paltalidis, N. & Philip, D. (2022). Forward Guidance and Corporate Lending. Review of Finance 26(4): 899-935 is available online at:

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