The Supply-Side Determinants of Loan Contract Strictness

  title={The Supply-Side Determinants of Loan Contract Strictness},
  author={Justin Murfin},
  • Justin Murfin
  • Published 2011
Using a novel measure of contract strictness based on the ex-ante probability of a covenant violation, I investigate how lender-specific shocks impact the strictness of the loan contract that a borrower receives. Exploiting between-bank variation in recent portfolio performance, I find evidence that banks write tighter contracts than their peers after suffering payment defaults to their own loan portfolios, even when defaulting borrowers are in different industries and geographic regions than… CONTINUE READING
Highly Influential
This paper has highly influenced 10 other papers. REVIEW HIGHLY INFLUENTIAL CITATIONS
Highly Cited
This paper has 50 citations. REVIEW CITATIONS


Publications citing this paper.
Showing 1-10 of 39 extracted citations

Debt Covenants and Risk Taking 1

View 8 Excerpts
Highly Influenced

Local Bankruptcy and Geographic Contagion in the Bank Loan Market

Gillian Tett
View 3 Excerpts
Highly Influenced

fewer than 50 Citations

Citations per Year
Semantic Scholar estimates that this publication has 50 citations based on the available data.

See our FAQ for additional information.


Publications referenced by this paper.
Showing 1-10 of 40 references

Eckbo, ed.: Handbook of Corporate Finance: Empirical Corporate Finance, Vol. 1 (Elsevier

B E.
Huidan and Daniel Paravisini, • 2011
View 4 Excerpts
Highly Influenced

The effect of banking crisis on bankdependent borrowers

Amiyatosh Purnanandam
Econometrica • 2011

Local Bank Financial Constraints and Firm Access to External Finance, The Journal of Finance 63, 2161–2193

Paravisini, Daniel

Growth opportunities and the choice of leverage , debt maturity , and covenants

Tao-Hsien Dolly King
Review of Economics and Statistics • 2007

Similar Papers

Loading similar papers…