| Tekijä: | Martin, J. S. Santomero, A. M. |
| Otsikko: | Investment opportunities and corporate demand for lines of credit |
| Lehti: | Journal of Banking and Finance
1997 : OCT, VOL. 21:10, p. 1331-1350 |
| Asiasana: | INVESTMENTS CREDIT CONTROL LOANS COMMITMENT BANK LENDING |
| Kieli: | eng |
| Tiivistelmä: | This article models credit line demand using a new framework in which the firm's credit line demand is determined by uncertainty in the future need for cash owing to stochastic arrival of investment opportunities. The firm assesses its growth prospects and pricing structure of the available credit line contract. It then chooses a credit line that equalizes commitment cost of a credit line today against the differential cost of expected spot borrowing tomorrow if the credit line is overrun. Credit line is decreasing in the commitment cost and increasing in the cost incurred due to overruns. |
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