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Bank Monitoring with On‐Site Inspections

Amanda Heitz et al.

The Journal of Finance2026https://doi.org/10.1111/jofi.70026article
FT50UTD24AJG 4*ABDC A*
Weight
0.37

Abstract

Using proprietary transaction‐level data on nonsyndicated construction loans, we provide some of the first empirical evidence on the drivers and consequences of bank monitoring through on‐site inspections. Banks trade off monitoring intensity with favorable origination terms. Monitoring intensity escalates in response to local economic downturns or the bank's financial instability. Borrowers with negative inspection reports have more draw requests denied, suggesting that monitoring outcomes impact credit decisions. Both the occurrence and threat of increased inspection frequency correspond to reduced defaults. Overall, our results provide empirical support for a substantial body of theoretical literature on bank monitoring.

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https://doi.org/https://doi.org/10.1111/jofi.70026

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@article{amanda2026,
  title        = {{Bank Monitoring with On‐Site Inspections}},
  author       = {Amanda Heitz et al.},
  journal      = {The Journal of Finance},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/jofi.70026},
}

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Bank Monitoring with On‐Site Inspections

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.