Since bank credit lines are a major source of corporate funding and liquidity, we examine the determinants of credit … line usage with a database of Spanish corporate credit lines. A line's default status is the primary factor driving its … usage, which increases as a firm approaches default. Several lender characteristics suggest an important role for bank …

Managing the credit risk inherent to a corporate credit line is similar to that of a term loan, but with one key … difference. For both instruments, the bank should know the borrower's probability of default (PD) and the facility's loss given … default (LGD). However, since a credit line allows the borrowers to draw down the committed funds according to their own needs …

Previous studies on financial frictions have been unable to establish the empirical significance of credit constraints … in macroeconomic fluctuations. This paper argues that the muted impact of credit constraints stems from the absence of a … and we allow productive agents to be credit-constrained. A combination of these two features enables our model to …

We present a model with heterogeneous firms, in which credit constraints may give rise to self-fulfilling, sunspot … constrained by expected equity value. Interactions between debt and equity value made possible by credit constraints generate a … credit externality, which leads to procyclical total factor productivity (TFP) and, with sufficiently high cost of financial …