التفاصيل البيبلوغرافية
| العنوان: |
Credit Default Swaps and Lender Incentives in Bank Debt Renegotiations. |
| المؤلفون: |
Chakraborty, Indraneel, Chava, Sudheer, Ganduri, Rohan |
| المصدر: |
Journal of Financial & Quantitative Analysis; Aug2023, Vol. 58 Issue 5, p1911-1942, 32p |
| مصطلحات موضوعية: |
CREDIT, DEBT, DEBTOR & creditor, MONEYLENDERS, DEFAULT (Finance), CERTIFICATES of deposit, FINANCE |
| مستخلص: |
Using a regression-discontinuity design and within lender–borrower variation, we analyze how credit default swaps (CDSs) affect bank incentives and borrower outcomes in renegotiations after covenant violations. While existing studies document an investment decline after covenant violations, we find that covenant-violating firms maintain their investment subsequent to the introduction of CDS trading. Moreover, after CDS introduction, covenant-violating firms are less likely to default. Our results suggest that in the private debt markets, CDSs discipline borrowers, while the empty creditor problem due to CDS is mitigated because of lenders' reputation concerns and lower coordination frictions. [ABSTRACT FROM AUTHOR] |
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