Bank Monitoring

36 Pages Posted: 2 Dec 2015 Last revised: 12 Feb 2016

See all articles by Matthew C. Plosser

Matthew C. Plosser

Federal Reserve Banks - Federal Reserve Bank of New York

João A. C. Santos

Federal Reserve Bank of New York

Date Written: January 8, 2016

Abstract

This paper empirically explores the monitoring behavior of banks. We are able to infer bank monitoring activity by observing changes in internally-generated risk metrics for corporate credits. We use these measures of monitoring activity to better understand the bank monitoring motives and abilities. We find banks more closely monitor those credits to which they are most exposed. In contrast, we do not detect that syndicate agents monitor more than other banks. Banks with a larger share of a loan appear to passively monitor public credits more closely, but there is little evidence of proactive monitoring by banks with large syndicate shares. Banks risk estimates predict equity returns and ratings changes, consistent with a 'special' role for banks as claimants with proprietary information.

Keywords: banks, monitoring, syndicated loans

JEL Classification: G20

Suggested Citation

Plosser, Matthew C. and Santos, João A. C., Bank Monitoring (January 8, 2016). Available at SSRN: https://ssrn.com/abstract=2697146 or http://dx.doi.org/10.2139/ssrn.2697146

Matthew C. Plosser (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

João A. C. Santos

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-5583 (Phone)
212-720-8363 (Fax)

HOME PAGE: HTTP://WWW.NEWYORKFED.ORG/RMAGHOME/ECONOMIST/SANTOS/CONTACT.HTML

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
106
Abstract Views
1,073
rank
275,181
PlumX Metrics