between cash and bank credit lines. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms … with high aggregate risk find it costly to get credit lines and opt for cash in spite of higher opportunity costs and … liquidity premium. Likewise, in times when aggregate risk is high, firms rely more on cash than on credit lines. We verify these …

under previously committed credit lines. We show that during the collapse of the Asset Backed Commercial Paper market in the … conditions on the outstanding credit lines offered to borrowers in violation of a covenant. Looking at the broader period of the …, following a covenant violation on a credit line. Our paper suggests that a worsening in financial conditions of lenders can bear …

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 … during the recent crisis. Banks in worse financial health are more likely to restrict access to credit lines following a …

We suggest a new mechanism–the liquidity insurance channel–based on the widespread reliance of high credit quality … firms on bank credit lines for liquidity management. Our model matches the patterns of usage of loans and credit lines in … credit quality firms. Our framework can explain why credit line origination is more cyclical than loan origination. Overall …

cash reserves or bank lines of credit. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result …, firms with high aggregate risk find it costly to get credit lines from banks and opt for cash reserves in spite of higher … have a higher ratio of cash reserves to lines of credit, controlling for other determinants of liquidity policy. This …