Discussion Paper

Does Bank Monitoring Affect Loan Repayment?

Abstract: Banks monitor borrowers after originating loans to reduce moral hazard and prevent loan losses. While monitoring represents an important activity of bank business, evidence on its effect on loan repayment is scant. In this post, which is based on our recent paper, we shed light on whether bank monitoring fosters loan repayment and to what extent it does so.

Keywords: bank monitoring; nonperforming loans; tax policy; financial intermediation; banks;

JEL Classification: G2; G3;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2022-12-02

Number: 20221202