includes more financial covenants which are also more restrictive. Switching banks after a violation does not reduce these …

We document a significant inverse relationship between a firm’sdividend payouts and reliance on bank loan financing …. Banks limitdividend payouts to shareholders in order to protect the integrity oftheir senior claims on the firm’s assets …. Moreover, dividendpayouts decline in the presence of monitoring by relationship banks,which acts as an effective governance …