The Determinants of Contract Terms in Bank Revolving Credit Agreements by Steven Dennis, Debarshi Nandy, Ian G. Sharpe

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We find strong interrelationships between contract terms:

  • bi-directional relationship between duration and secured status
  • bi-directional relationship between the all-in-spread and commitment fees
  • unidirectional relationship from both duration and secured status to all-in-spread

Notes:

  • Melnik and Plaut (1986) characterize bank commitment contracts as providing a package of n-contract terms that cannot be split and traded separately.

  • "underinvestment problem", as in Determinants of Corporate Borrowing (1977) by SC Myers

See loan agreements (in Russian):