Project risk and the bank monitored credit line

被引:0
|
作者
Van Tassel, Eric [1 ]
机构
[1] Florida Atlantic Univ, Dept Econ, 777 Glades Rd, Boca Raton, FL 33431 USA
关键词
D O I
10.1111/jfir.12411
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
In this paper we investigate the role a monitored credit line plays in managing a firm's liquidity needs and influencing the firm's project risk. We develop a theoretical model where a firm finances a risky project that is subject to a liquidity shock. External lenders are imperfectly informed about both project risk and the firm's liquidity, which leads to moral hazard. We identify conditions under which it is optimal for the firm to fund the project using a term loan from a less informed lender and manage liquidity using a line of credit from an informed lender.
引用
收藏
页码:149 / 166
页数:18
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