Empirical Analysis of Corporate Credit Lines
35 Pages Posted: 2 Oct 2008
There are 3 versions of this paper
Empirical Analysis of Corporate Credit Lines
Empirical Analysis of Corporate Credit Lines
Empirical Analysis of Corporate Credit Lines
Date Written: October 2, 2008
Abstract
Since bank credit lines are a major source of corporate funding, we examine the determinants of credit line usage with a comprehensive database of Spanish corporate credit lines. A line's default status is a key factor driving its usage, which increases as a firm's financial condition worsens. Line usage decreases by roughly 10% for each year of its life. Lender characteristics, such as the number and length of a firm's banking relationships, are found to affect a firm's usage decisions, and credit line usage is found to be inversely related to macroeconomic conditions.
Keywords: credit lines, firm default, bank lending, exposure at default
JEL Classification: E32, G18, M21
Suggested Citation: Suggested Citation
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