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Research Details
Debt flexibility
Abstract
This paper documents new facts on the modification of bank loans using FR Y-14Q regulatory data on C\&I loans. We find that loan-level modifications of key contractual terms, such as interest and maturity, occur at least once for 41\% of loans. Cross sectional differences in modifications are substantial and amplified by borrower distress. Relative to single-lender loans, syndicated loans are 1.5 times more likely to be modified and interest rate changes are twice as likely. Our findings call into question whether 1) creditor dispersion makes loan modifications more challenging and 2) relationship lending between banks and small borrowers creates more scope for flexibility when borrower-level conditions change.
Type
Working Paper
Author(s)
Nicolas Crouzet, Rhys Bidder, Michael Siemer, Maggie Jacobson
Date Published
2024
Citations
Crouzet, Nicolas, Rhys Bidder, Michael Siemer, and Maggie Jacobson. 2024. Debt flexibility.
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