Overall, the results of our paper have important implications regarding the impact of corporate events, such as defaults and bankruptcies on debt values, the relative monitoring advantage of loans (and bank lenders) versus bonds, the benefits of loan monitoring for other financial markets (such as the bond market and the stock market), and on the potential diversification benefits of including loans as an asset class in an investment portfolio along with stocks and bonds. The remainder of the paper is organized as follows. Section 2 describes the growth of the secondary market for bank loans. Section 3 describes our data and sample selection. Section 4 presents our test.
