Acharya, Viral; Almeida, Heitor; Ippolito, Filippo; … - In: Journal of Financial Economics 112 (2014) 3, pp. 287-319
We propose a theory of credit lines provided by banks to firms as a form of monitored liquidity insurance. Bank monitoring and resulting revocations help control illiquidity-seeking behavior of firms insured by credit lines. The cost of credit lines is thus greater for firms with high liquidity...