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- Title
Benefits from Lending Relationships in Public Debt Markets: Empirical Evidence from the Commercial Paper Market.
- Authors
BLACKWELL, DAVID W.; KOTOMIN, VLADIMIR; WINTERS, DREW B.
- Abstract
There is a large body of literature on the benefits of established lending relationships with banks, which is an intermediated debt market. We extend the literature by testing for benefits from direct lending relationships in the commercial paper market, which is a public debt market. Diamond (1991) suggests that firms access public debt markets when they have enough reputation to no longer require the close monitoring by banks. Using daily rate data for dealer-placed and directly placed commercial paper, we find that the year-end liquidity squeeze is less pronounced in the directly placed commercial paper than in the dealer-placed commercial paper, consistent with the existence of benefits from direct lending relationships in this public debt market.
- Subjects
PUBLIC debts; EMPIRICAL research; COMMERCIAL paper issues; BANKING industry; LIQUIDITY (Economics)
- Publication
Quarterly Journal of Finance & Accounting, 2015, Vol 53, Issue 3/4, p79
- ISSN
1939-8123
- Publication type
Article