How Do Private Firms Use Credit Lines?
9 Pages Posted: 24 May 2011
Date Written: May 23, 2011
The authors find that firms that face higher upfront commitment fees, risk premium spreads, or usage fees have smaller credit lines, while those with higher overdraft fees have larger ones. Firms with greater profit growth in the past have larger credit lines, while those with more internal funds or higher volatility in profit growth have smaller credit lines. The results for line utilization are quite similar.
Keywords: bank loan commitment, credit lines, private firms, financial economics
JEL Classification: E440, G210
Suggested Citation: Suggested Citation