Bank Monitoring: Evidence from Syndicated Loans

51 Pages Posted: 30 Aug 2016 Last revised: 8 Jul 2017

See all articles by Matthew Gustafson

Matthew Gustafson

Pennsylvania State University - Smeal College of Business

Ivan Ivanov

Board of Governors of the Federal Reserve System

Ralf R. Meisenzahl

Federal Reserve Board

Date Written: July 7, 2017

Abstract

Using two new measures of bank monitoring, we examine the determinants of syndicated loan monitoring. Lenders conduct active monitoring, such as borrower meetings or site visits, on 20% of loans and demand information at least on a monthly basis for 50% of loans. Both monitoring measures are positively related to the lead arranger's loan share and negatively related to loan maturity, borrower public status, and covenant use. Consistent with monitoring generating actionable information, active monitoring is positively related to future covenant violations and changes in loan characteristics, while lenders demand borrower information more frequently as borrower financial health deteriorates.

Keywords: Bank Lending, Bank Monitoring, Syndicated Loans

JEL Classification: G21

Suggested Citation

Gustafson, Matthew and Ivanov, Ivan and Meisenzahl, Ralf R., Bank Monitoring: Evidence from Syndicated Loans (July 7, 2017). Available at SSRN: https://ssrn.com/abstract=2831455 or http://dx.doi.org/10.2139/ssrn.2831455

Matthew Gustafson (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

East Park Avenue
University Park, PA 16802
United States

Ivan Ivanov

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Ralf R. Meisenzahl

Federal Reserve Board ( email )

20th and C Streets, NW
Washington, DC 20551
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
453
rank
61,433
Abstract Views
1,663
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information