TY - JOUR
T1 - Bank monitoring
T2 - Evidence from syndicated loans
AU - Gustafson, Matthew T.
AU - Ivanov, Ivan T.
AU - Meisenzahl, Ralf R.
N1 - Publisher Copyright:
© 2020
Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.
PY - 2021/2
Y1 - 2021/2
N2 - We directly measure banks’ monitoring of syndicated loans. Banks typically demand borrower information on at least a monthly basis. About 20% of loans involve active monitoring (i.e., site visits or third-party appraisals). Monitoring increases with the lead bank's incentives and the value of information and is negatively associated with loan spreads and maturity. The monitoring captured by our measures can either complement or substitute for covenant-based monitoring, depending on whether the monitoring informs covenant compliance. Banks increase monitoring following deteriorations in borrower financial condition and credit line drawdowns. Finally, monitoring is positively related to future covenant violations and loan renegotiations.
AB - We directly measure banks’ monitoring of syndicated loans. Banks typically demand borrower information on at least a monthly basis. About 20% of loans involve active monitoring (i.e., site visits or third-party appraisals). Monitoring increases with the lead bank's incentives and the value of information and is negatively associated with loan spreads and maturity. The monitoring captured by our measures can either complement or substitute for covenant-based monitoring, depending on whether the monitoring informs covenant compliance. Banks increase monitoring following deteriorations in borrower financial condition and credit line drawdowns. Finally, monitoring is positively related to future covenant violations and loan renegotiations.
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U2 - 10.1016/j.jfineco.2020.08.017
DO - 10.1016/j.jfineco.2020.08.017
M3 - Article
AN - SCOPUS:85090300833
VL - 139
SP - 452
EP - 477
JO - Journal of Financial Economics
JF - Journal of Financial Economics
SN - 0304-405X
IS - 2
ER -