This paper investigates if the bond market disciplines all banks equally, in the sense of demanding the same relative risk premium across banks of different risk over the business cycle. To test this hypothesis, the paper compares the difference between the credit spreads in the primary market...

Theory suggests that banks' private information lets them hold up borrowers for higher interest rates. Since new information about a firm is revealed at the time of its bond IPO, it follows that banks will be forced to adjust their loan interest rates downwards after firms undertake their bond...

Many have claimed that credit default swaps (CDSs) have lowered the cost of debt financing to firms by creating new hedging opportunities and information for investors. This paper evaluates the impact that the onset of CDS trading has on the spreads that underlying firms pay to raise funding in...

The massive losses that banks have incurred with the meltdown of subprime mortgages have raised concerns with their ability to continue extending loans to corporations. In this paper, we attempt to ascertain these concerns by investigating if banks have changed their loan pricing policies in...

We provide evidence that credit lines offer liquidity insurance to borrowers. Borrowers are able toextensively use their credit lines in recessions and ahead of credit line cuts. In fact drawdowns andchanges in drawdowns predict internal credit rating downgrades and credit line cuts,...

The Basel I Accord introduced a discontinuity in required capital for undrawn credit commitments. While banks had to set aside capital when they extended commitments with maturities in excess of one year, short-term commitments were not subject to a capital requirement. We use this difference to...

We study how syndicated lending networks propagate natural disasters. Natural disasters lead to an increase in corporate credit demand in affected regions. Banks meet the increase in credit demand in part by reducing credit to distant regions, unaffected by disasters. Capital constraints play a...

In this paper we examine the importance of banks' corporate control by investigating the loan policy pricing effect of banks' voting stakes on their borrowers. We exploit the fact that banks may hold shares of firms in a fiduciary capacity to identify a clean measure of banks' control over...

This paper investigates whether the bond market disciplines all banks equally in the sense of demanding the same relative risk premium across banks of different risk over time. To test this hypothesis the paper compares the difference between the credit spreads in the primary market of bank and...

The growth of the European financial markets, together with the new, stricter regulations on the U.S. financial system, has spurred a debate about the competitiveness of the U.S. financial markets. In this paper, we compare underwriting costs in the U.S. bond market and the Eurobond market over...