Corporate term loans typically include a penalty-free prepayment option. In a model where borrowers strategically prepay, we show that high prepayment risk can trigger credit rationing by the bank. However, an upfront fee, which allows the bank to lower the loan spread and therefore the...

We examine how securitization markets affect the role of banks as monitors in corporate lending. We find that banks active in securitization impose looser covenants on borrowers at origination. After origination, these borrowers take on substantially more risk than borrowers of...

With a license to use individually identifiable information on student loan borrowers, we find that a majority of distressed student borrowers manage their debt sub-optimally and that suboptimal debt management is associated with higher loan delinquency. Loan mismanagement varies across student...