Cooperman, Harry; Duffie, Darrell; Luck, Stephan; Wang, … - National Bureau of Economic Research - 2023
Corporate credit lines are drawn more heavily when funding markets are more stressed. This covariance elevates expected … bank funding costs. We show that credit supply is dampened by the associated debt-overhang cost to bank shareholders. Until … 2022, this impact was reduced by linking the interest paid on lines to credit-sensitive reference rates such as LIBOR. We …