To what extent do credit lines provide liquidity insurance? We investigate this question using a unique dataset with firms' actual draw-down rates and find that firms draw down their lines of credit at higher rates than the initial contract rates recorded in Dealscan. More importantly, we find...

We examine how monitoring costs and costs of financial distress affect the use of performance pricing provisions in bank loan contracts. We find that firms that are easier to monitor, such as those with better accounting quality, lower information opacity, or a stronger prior relationship with...