Using a proprietary database from a large Chinese state-owned bank, we examine whether information evolved from banking relationships predicts commercial loan default by industrial firms. We find that the bank's relationship information is significantly linked to the incidence of default, and...

We examine whether managerial overconfidence impacts the use of performance-pricing provisions in loan contracts (PSD). Managers with biased views may issue PSD because they consider this form of debt to be mispriced. Our evidence shows that overconfident managers are more likely to issue...

This paper presents a theoretical model of the monitoring behaviour of a bank-intermediated financial system with a rolling portfolio of long-term loans. The projects funded by the loans are subject to persistent idiosyncratic shocks that are freely observed by the borrowers. Borrowers pay entry...