Acharya, Viral V.; Almeida, Heitor; Ippolito, Filippo; … - National Bureau of Economic Research (NBER) - 2013
We propose and test a theory of corporate liquidity management in which credit lines provided by banks to firms are a form of monitored liquidity insurance. Bank monitoring and resulting credit line revocations help control illiquidity-seeking behavior by firms. Firms with high liquidity risk...