Topic
Borrowing base
About: Borrowing base is a research topic. Over the lifetime, 143 publications have been published within this topic receiving 6437 citations.
Papers published on a yearly basis
Papers
Patent•
6 Dec 1994
TL;DR: In this article, the authors present a practical communication and computer based system and method for effecting exchange, investment and borrowing involves the use of digital communication and computation terminals distributed to users and service providers.
Abstract: A practical communication and computer based system and method for effecting exchange, investment and borrowing involves the use of digital communication and computation terminals distributed to users and service providers. Through the system described and its combined computer and communication terminals, client/customers may purchase goods and services, save, invest, track bonuses and rebates and effect enhanced personal financial analysis, planning, management and record keeping with less effort and increased convenience. Through a prioritization function, the client specifies her financial objectives, her risk preference, and budgetary constraints. The prioritization function automatically suggests to the individual a portfolio of asset and liability accounts that may be credited and/or debited to provide the required funds for consumption and to form investments and borrowing to best realize her financial objectives over a defined time horizon. If desired, the system automatically manages a client's budgetary and financial affairs through a system of expert sweeps based on a client's preferences. The client's accounts are monitored via a borrowing power baseline, and considered imbalanced if the client's borrowing power is less than the minimum borrowing power. If the account is imbalanced, the client may reallocate the assets and liabilities within the client account and/or modify a set of constraints on the client account. If the client account is still not balanced after modification of the account, the system will deny authorization for certain requested transactions, and may initiate the liquidation of certain asset accounts and reduce the balances of one or more liability accounts.
1,092 citations
TL;DR: This article found that repeated borrowing from the same lender affects loan contract terms and that such borrowing translates into a 10 to 17 bps lowering of loan spreads, and that the relationship borrowers obtain larger loans compared to non-relationship borrowers.
Abstract: Does repeated borrowing from the same lender affect loan contract terms? We find that such borrowing translates into a 10 to 17 bps lowering of loan spreads. These results hold using multiple approaches (Propensity Score Matching, Instrumental Variables, and Treatment Effects Model) that control for the endogeneity of relationships. We find that relationships are especially valuable when borrower transparency is low and the moral hazard among lending syndicate members is high. We also provide a demarcation line between relationship and transactional lending. We find that spreads charged for relationship loans and non-relationship loans become indistinguishable if the borrower is in the top 30% when ranked by asset size. Similar dissipation of relationship benefits occurs if the borrower has public rated debt or is part of the S&P 500 index. We find that past relationships reduce collateral requirements. Relationships are also associated with shorter debt maturity especially for the lowest quality borrowers. Our results are robust to an estimation methodology which allows loan spread, collateral requirements, and loan maturity to be determined jointly using an instrumental variables approach. We also find relationship borrowers obtain larger loans (scaled by the borrower's asset size) compared to non-relationship borrowers. Our results imply that, even for firms that have multiple sources of outside financing, borrowing from a prior lender obtains better loan terms.
950 citations
TL;DR: This article developed a general model of lending in the presence of endogenous borrowing constraints and derived implications for firm growth, survival, leverage, and debt maturity, which is qualitatively consistent with stylized facts on the growth and survival of firms.
Abstract: We develop a general model of lending in the presence of endogenous borrowing constraints. Borrowing constraints arise because borrowers face limited liability and debt repayment cannot be perfectly enforced. In the model, the dynamics of debt are closely linked with the dynamics of borrowing constraints. In fact, borrowing constraints must satisfy a dynamic consistency requirement: The value of outstanding debt restricts current access to short term capital, but is itself determined by future access to credit. This dynamic consistency is not guaranteed in models of exogenous borrowing constraints, where the ability to raise short term capital is limited by some prespecified function of debt. We characterize the optimal default-free contract - which minimizes borrowing constraints at all histories - and derive implications for firm growth, survival, leverage, and debt maturity. The model is qualitatively consistent with stylized facts on the growth and survival of firms. Comparative statics with respect to technology and default constraints are derived.
520 citations
TL;DR: In this article, the authors investigate how an established borrowing relationship affects the costs associated with initial public offerings of equity and find that IPOs of firms with previously established borrowing relationships are underpriced substantially less than other IPOs.
336 citations
TL;DR: In this paper, the authors test the predictions of existing theories about the main purposes of fees and provide supporting evidence that fees are used to price options embedded in loan contracts such as the drawdown option for credit lines and the cancellation option in term loans.
Abstract: More than 80% of US syndicated loans contain at least one fee type and contracts typically
specify a menu of spread and different types of fees. We test the predictions of existing theories
about the main purposes of fees and provide supporting evidence that: (1) fees are used to price
options embedded in loan contracts such as the draw-down option for credit lines and the
cancellation option in term loans; and (2) fees are used to screen borrowers about the likelihood
of exercising these options. We also propose a new total-cost-of-borrowing measure that includes
various fees charged by lenders.
329 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2020 | 2 |
| 2018 | 1 |
| 2017 | 3 |
| 2016 | 6 |
| 2015 | 6 |
| 2014 | 8 |