@article {523346,
	title = {The Loan Covenant Channel: How Bank Health Transmits to the Real Economy},
	journal = {Journal of Finance},
	volume = {77},
	number = {1},
	year = {2022},
	pages = {85-128},
	abstract = {
	We document the importance of covenant violations in transmitting bank health to nonfinancial firms using a new supervisory data set of bank loans. Roughly one-third of loans in our data breach a covenant during the 2008-09 period, providing lenders the opportunity to force a renegotiation of loan terms or to accelerate repayment of otherwise long-term credit. Lenders in worse health are more likely to force a reduction in the loan commitment following a violation. The reduction in credit to borrowers who violate a covenant can account for the majority of the cross-sectional variation in credit supply during the 2008-09 crisis.\&nbsp;

},
	url = {https://onlinelibrary.wiley.com/doi/10.1111/jofi.13074},
	author = {Gabriel Chodorow-Reich and Antonio Falato}
}
