Benefits from Lending Relationships in Public Debt Markets: Empirical Evidence from the Commercial Paper Market

David W. Blackwell, Vladimir Kotomin, Drew B. Winters
2012 Social Science Research Network  
There is a large and growing body of literature on the benefits of established lending relationships with banks, which is an intermediated debt market. We extend that 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 of banks. Using daily rate data for dealer-placed and
more » ... laced commercial paper; we find evidence consistent with the existence of benefits from direct lending relationships in this public debt market.
doi:10.2139/ssrn.2138514 fatcat:pllib7uvcvgmpgwxkzrd46arse