We study how the consequences of violations of covenants associated with bank lines of credit to firms vary with the … financial health of lenders. Following a violation banks restrict usage of lines of credit by raising spreads, shortening … is fairly stable during the period 2002-2011, the reaction of banks to violations became significantly more restrictive …

macroeconomic risk, investors reduce direct investment and hold more bank deposits. This ‘flight to quality’ leaves banks flush with … liquidity. Inside banks, given lack of observability of effort, loan officers (or risk takers) are compensated based on the … volume of loans but are penalized if banks suffer a high enough liquidity shortfall. Outside banks, when there is heightened …

suggest that improving bank access to branching affects the sectoral specialization (or diversification) of output, in a …We document that the deregulation of bank branching restrictions in the United States triggered a reallocation across …