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Author:Berlin, Mitchell 

Working Paper
Credit card rates and consumer search

Working Papers , Paper 88-1

Working Paper
Deposits and relationship lending

The authors empirically examine the hypothesis that access to deposits with inelastic rates (core deposits) permits a bank to make contractual agreements with borrowers that are infeasible if the bank must pay market rates for its funds. Access to core deposits insulates a bank's costs of funds from exogenous shocks, allowing the bank to insulate its borrowers against exogenous credit shocks. Using a large sample of loans from the Survey of the Terms of Bank Lending, the authors find that when they control for competitive conditions in loan markets, banks funded more heavily with core ...
Working Papers , Paper 96-18

Working Paper
Financial intermediation as vertical integration

Working Papers , Paper 93-3

Working Paper
Financial contracts and the legal treatment of informed investors

The authors explore the economic rationale for equitable subordination, a legal doctrine that permits a firm's claimants to seek to subordinate an informed investor's financial claim in bankruptcy court. Fear of equitable subordination is often cited as a reason that banks in the U.S. are wary of taking an active management role in their borrowing firms. The authors show that an optimally designed menu of claims for a large investor will include features that resemble equitable subordination. The authors' model provides a partial rationale for a financial system in which powerful creditors do ...
Working Papers , Paper 99-8

Working Paper
On the profitability and cost of relationship lending

The authors provide some preliminary evidence on the costs and profitability of relationship lending by commercial banks. Drawing on recent research that has identified loan rate smoothing as a significant element in lending relationships between banks and firms, the authors carry out a two-stage procedure. In the first stage, the authors derive bank-specific measures of the extent to which the banks in their sample engage in loan rate smoothing for small business borrowers in response to exogenous shocks to their credit risk. In the second stage, the authors estimate cost and (alternative) ...
Working Papers , Paper 97-3

Working Paper
The choice between bonds and bank loans

Working Papers , Paper 86-18

Working Paper
Concentration of Control Rights in Leveraged Loan Syndicates

We ?nd that corporate loan contracts frequently concentrate control rights with a subset of lenders. Despite the rise in term loans without ?nancial covenants?so-called covenant-lite loans?borrowing ?rms? revolving lines of credit almost always retain traditional ?nancial covenants. This split structure gives revolving lenders the exclusive right and ability to monitor and to renegotiate the ?nancial covenants, and we con?rm that loans with split control rights are still subject to the discipline of ?nancial covenants. We provide evidence that split control rights are designed to mitigate ...
Working Papers , Paper 19-41

Working Paper
Public versus private debt: confidentiality, control, and product markets

The authors examine a firm's choice between public and private debt in a model where the firm's financing source affects its product market behavior. Two effects are examined. When frims' risk-taking decisions are strategic substitutes, debt financing leads to excessively risky product market strategies (as in Brander and Lewis' (1986) Cournot oligopoly with debt). Lender control through restrictive covenants--which is characteristic of private debt--can commit the firm to reduce aggressiveness in product markets and increase expected profits. This is the monitoring effect. On the other hand, ...
Working Papers , Paper 96-17

Working Paper
Concentration of Control Rights in Leveraged Loan Syndicates

Corporate loan contracts frequently concentrate control rights with a subset of lenders. In a large fraction of leveraged loans, which typically include a revolving line of credit and a term loan, the revolving lenders have the exclusive right and ability to monitor and renegotiate the financial covenants in the governing credit agreements. Concentration is more common in loans that include nonbank institutional lenders and in loans originated subsequent to the financial crisis, when recognition of bargaining frictions increased. We conclude that concentrated control rights maintain the ...
Working Papers , Paper 17-22

Working Paper
Debt covenants and renegotiation

Working Papers , Paper 92-9



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