Brown Bag Seminar
Brown Bag Seminar Financial Markets Department The seminar series "Brown...
Centre for Evidence-based Policy Advice
Centre for Evidence-based Policy Advice (IWH-CEP) ...
IWH FDI Micro Database
IWH FDI Micro Database The IWH FDI Micro Database (FDI = Foreign Direct...
Benign Neglect of Covenant Violations: Blissful Banking or Ignorant Monitoring?
IWH Discussion Papers,
Theoretically, bank‘s loan monitoring activity hinges critically on its capitalisation. To proxy for monitoring intensity, we use changes in borrowers‘ investment following loan covenant violations, when creditors can intervene in the governance of the firm. Exploiting granular bank-firm relationships observed in the syndicated loan market, we document substantial heterogeneity in monitoring across banks and through time. Better capitalised banks are more lenient monitors that intervene less with covenant violators. Importantly, this hands-off approach is associated with improved borrowers‘ performance. Beyond enhancing financial resilience, regulation that requires banks to hold more capital may thus also mitigate the tightening of credit terms when firms experience shocks.
East Germany Rearguard Only investments in education will lead to a further catch-up ...
Reports of the European Forecasting Network (EFN)
Reports of the European Forecasting Network (EFN) The European Forecasting...
The maths behind gut decisions First carefully weigh up the costs and benefits and then make a rational...
Social Mobility Equal opportunities for everyone Dossier ...