讲座主题：Bank competition and financial covenant tightness
摘 要：This study investigates the relationship between the bank competition and the tightness of financial covenants in the loan contracts. Using statewide bank branch intensity as the proxy of bank competition during 1995 – 2013, we find that the financial covenant tightness is positively associated with the bank competition. We explain the association as the banks offer credit to riskier borrowing firms under intensified competition and thus use more restrictive financial covenants to manage the risks of the loan portfolios. Our empirical evidence verifies the argument by showing negative association between the bank competition and the quality of borrowing firms. We also investigate the cross-sectional heterogeneities of the positive association between bank competition and the tightness of financial covenants.