Banks have access to different markets for credit risk transfer (CRT), including the credit derivative and the secondary loan markets. We investigate how and why a bank chooses among these markets to hedge the credit risk of a loan. We find that banks with capital and liquidity constraints are...

Are borrowers rewarded for repaying their loans? This paper investigates the consequences of covenant violations on subsequent loans to the same borrower using a hand-collected sample of US syndicated loans during the 1996 to 2010 period. We find that covenant violations have substantial...