CBOL: Cross-Bank Over-Loan Prevention, Revisited

Market concentration and commercial bank loan portfolios

This paper estimates the relationship between banking market concentration and high-risk portfolio strategies at commercial banks. I use the unprecedented changes in the degree of competition in local banking markets that occurred after 1980 to estimate the impact of market competition on the risk profile of commercial bank lending. I find evidence that increasing concentration has been associa...

Hedge Fund Activism and Bank Loan Contracting

Using a large sample of loans initiated by firms targeted by hedge fund activists during 19942008, we show that hedge fund activism has significant impacts on firms’ bank loan contracts. After the targeting announcement and relative to firms that are not targeted, the targeted firms pay significantly higher spreads, are more likely to be required to secure their loans, face more covenant restri...

Managerial style and bank loan contracting

This paper provides direct evidence that managerial style is a key determinant of the firm’s cost of capital, in the context of private debt contracting. Applying the novel empirical method by Abowd, Karmarz, and Margolis (1999) to a large sample that tracks job movement of top managers, we find that managerial style is a critical factor that explains a large part of the variation in loan contr...

Bank Capital Ratios, Competition and Loan Spreads

This paper empirically investigates whether or not banks charge higher loan spreads for having high capital ratios by using a dataset of all syndicated loans issued by public nonfinancial U.S. borrowers during the 1993 to 2007 period. We find convincing evidence that well-capitalized banks can indeed charge a ’spread premium’. We further investigate whether this result can be explained by banks...

Determinants of Commercial Bank Automobile Loan Rates