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Does IRS monitoring matter for the cost of bank loans?

Bermpei, Theodora, Kalyvas, Nikolaos Antonios, Wolfe, Simon (2023) Does IRS monitoring matter for the cost of bank loans? Journal of Financial Services Research, 65 (2-3). pp. 153-188. ISSN 0920-8550. (doi:10.1007/s10693-023-00403-9) (KAR id:100156)

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Abstract We show that IRS monitoring exerts a significantly negative effect on the cost of syndicated loans. A one standard deviation increase in the probability of an IRS audit decreases loan spreads by around nine basis points. We also find that this effect is stronger for borrowers with better lending relationships and credible access to public markets. These results indicate that IRS monitoring could increase the bargaining power of borrowers and restrain banks from extracting informational rents from their lending relationships. Thus, they provide a novel insight into how IRS monitoring could lower the cost of financing from the banking system.

Item Type: Article
DOI/Identification number: 10.1007/s10693-023-00403-9
Uncontrolled keywords: Syndicated loans ● IRS monitoring ● Information asymmetry ● Lending relationships
Subjects: H Social Sciences > HG Finance
Divisions: Divisions > Kent Business School - Division > Department of Accounting and Finance
Funders: University of Kent (
Depositing User: Nikolaos Antonios Kalyvas
Date Deposited: 21 Feb 2023 12:17 UTC
Last Modified: 16 May 2024 09:37 UTC
Resource URI: (The current URI for this page, for reference purposes)

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Kalyvas, Nikolaos Antonios.

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