This paper reviews empirical evidence on the use of bank lines of credit as a source of corporate liquidity …. Traditional explanation for lines of credit is that they provide insurance against liquidity shocks, in much the same as way … hoarding cash does. However, recent empirical research suggests that access to lines of credit is contingent on the credit …

We find credit line drawdowns are an important source of long-term finance for capital expenditures and acquisitions … for all but the highest rated firms. Unrated and to a lesser extent intermediate-rated firms draw down credit lines most … frequently when capital market conditions are unfavorable. Firms repay long-term credit line drawdowns relatively quickly, with 2 …

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 analyze how Credit Default Swaps (CDS) affect bank incentives and borrower outcomes in renegotiations after covenant …

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 …

these firms' future financial performance? (2) Does this predictability vary across different stages of the credit cycle … relationship is primarily present in the expansionary stages of the credit cycle. This suggests that a firm's current bank lender … applicants. The finding that this primarily occurs in credit cycle expansions is consistent with theory models that predict that …