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Can banks trade credit default swaps (CDSs) referenced on their current corporate clients at competitive prices, or are …
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We test whether bank loans change public bond yields. A 10% increase in bank debt raises bond yields by 15bps, reflecting a trade-off between the benefits of bank cross-monitoring and higher bond risk. This effect is smaller for firms with no CDS and junk debt, where bank monitoring is most...
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sensitivity tests and provide suggestive evidence of a close connection between the credit loan and stock markets. …
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