Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299279 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
Sveriges Riksbank Working Paper Series No. 425
Publisher: 
Sveriges Riksbank, Stockholm
Abstract: 
Commercial-paper backup lines account for a substantial share of undrawn loan commitments in the corporate sector, but have despite this received scant attention in the credit-line literature. In this paper, I study the liquidity-insurance properties of backup lines using a comprehensive loan- and security-level dataset and the sharp contraction of the Swedish commercial-paper market during the COVID-19 pandemic as an exogenous shock to the supply of market-provided liquidity. I find that backup lines provide commercial-paper issuers with reliable liquidity insurance and that banks' liquidity provision via commercial-paper backup lines in periods of distress does not crowd out lending to other firms.
Subjects: 
Credit lines
bank lending
liquidity insurance
commercial paper
COVID-19
JEL: 
D22
G21
G32
Document Type: 
Working Paper

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