We examine whether sin firms, those operating in the alcohol, tobacco, and gambling industries, face differential financing conditions in the loan market and, if so, whether societal norms shape banks’ pricing decisions. Using a global sample of syndicated loans, we combine detailed borrower- and loan-level data with two measures of social norms: a survey-based moral-values indicator and a multidimensional proxy derived from principal component analysis of moral values, consumption patterns, health burdens, and religious composition. We find that sin firms do not pay higher loan spreads when borrowing from banks headquartered in norm-neutral environments. However, banks headquartered in countries with stricter societal norms charge sin firms significantly higher spreads. This effect is not driven by information asymmetry or borrower risk but reflects a normative surcharge associated with lending to stigmatised industries. Our results provide the first evidence on the price of sin in the bank loan market and highlight the importance of cultural forces in shaping global credit conditions.
