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Jurnal

Journal of Financial Economics

Keyword

Relationships; Banking Covenants; Information asymmetries; Monitoring incentives

Pengarang

Robert Prilmeier

Subject

  1. ECONOMIC
  2. FINANCIAL

    [Abstrak]

    Despite
    the importance of banks’ role as delegated monitors, little is known
    about how non-price terms of loan contracts are structured to optimize
    information production in a lending relationship. Using a large sample
    of corporate loans, this paper examines the effect of relationship
    lending on covenant choice. Consistent with information asymmetry
    theories, covenant tightness is relaxed over the duration of a
    relationship, especially for opaque borrowers. In contrast, the effect
    of lending relationship intensity on the number of covenants included in
    a loan follows an inverted U shape. I discuss potential explanations
    for this finding.


    Periode

    Vol 123, Nomor 3, Tahun 2017

    [Berkas]

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