The DOI matches its Crossref record; 47 of the 47 references it cites were found in a registry or an index.
Credit Line Usage, Checking Account Activity, and Default Risk of Bank Borrowers
Abstract
Information on borrower quality is a fundamental issue in debt contracting, corporate and consumer finance, and financial intermediation. We investigate the link between account activity and information production on borrower risk. Based on a unique data set, we find that credit line usage, limit violations, and cash inflows exhibit abnormal patterns approximately 12 months before default events. Measures of account activity substantially improve default predictions and are especially helpful for monitoring small businesses and individuals. Furthermore, early warning indications result in higher loan spreads, and in a higher likelihood of limit reductions and complete write-offs. Our study shows that account activity provides a real-time window into the borrower's cash flows, thus explaining why banks have an advantage in providing certain types of debt financing.
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Cites
Financial intermediation and delegated monitoring
Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476 · cited 1×
“Modern research on financial intermediation has been analyzing the role of banks in information production (Diamond 1984; Ramakrishnan and Thakor 1984; Boyd and Prescott 1986).”
The Benefits of Lending Relationships: Evidence from Small Business Data
PETERSEN, M. A., & RAJAN, R. G. (1994) · The Journal of Finance · doi:10.1111/j.1540-6261.1994.tb04418.x · Cited by 5,440
Insiders and Outsiders: The Choice between Informed and Arm's‐Length Debt
RAJAN, R. G. (1992) · The Journal of Finance · doi:10.1111/j.1540-6261.1992.tb04662.x · Cited by 3,902
Relationship Lending and Lines of Credit in Small Firm Finance
Berger, A. N., & Udell, G. F. (1995) · The Journal of Business · doi:10.1086/296668 · Cited by 3,636
Monitoring and reputation: The choice between bank loans and directly placed debt
Diamond, D. W. (1991) · Journal of Political Economy · doi:10.1086/261775 · Cited by 3,331
Relationship Banking: What Do We Know?
Boot, A. W. A. (2000) · Journal of Financial Intermediation · doi:10.1006/jfin.2000.0282 · Cited by 2,354
Fama, E. F. (1985) · Journal of Monetary Economics · doi:10.1016/0304-3932(85)90051-0 · Cited by 2,342
Does Distance Still Matter? The Information Revolution in Small Business Lending
Petersen, M. A., & Rajan, R. G. (2002) · The Journal of Finance · doi:10.1111/1540-6261.00505 · Cited by 2,150
A more complete conceptual framework for SME finance
Berger, A. N., & Udell, G. F. (2006) · Journal of Banking & Finance · doi:10.1016/j.jbankfin.2006.05.008 · Cited by 1,992
Berger, A. N., Miller, N. H., Petersen, M. A., Rajan, R. G., & Stein, J. C. (2005) · Journal of Financial Economics · doi:10.1016/j.jfineco.2004.06.003 · Cited by 1,888
Cited by
On the Rise of FinTechs: Credit Scoring Using Digital Footprints
Berg, T., Burg, V., Gombović, A., & Puri, M. (2020) · The Review of Financial Studies · doi:10.1093/rfs/hhz099 · Cited by 919
Bank-Branch Supply, Financial Inclusion, and Wealth Accumulation
Célerier, C., & Matray, A. (2019) · The Review of Financial Studies · doi:10.1093/rfs/hhz046 · Cited by 283
Relationship banking and information technology: the role of artificial intelligence and FinTech
Jakšič, M., & Marinč, M. (2019) · Risk Management · doi:10.1057/s41283-018-0039-y · Cited by 266
Metadata
- Authors
- Norden, L., & Weber, M.
- Venue
- Review of Financial Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 2010-08-18
- Volume
- 23
- Issue
- 10
- Pages
- 3665-3699
- ISSN
- 0893-9454 (ISSN-L)
- 1465-7368
- OpenAlex
- W2008683864
- Cited by
- 279
- References
- 47
- FWCI
- 55.15
- Type
- journal article
- Language
- en
- Open access
- closed
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
