An Analysis of Revolving Credit Agreements - March 1981 #229459

Capital markets provide the bulk of long and intermediate — term funds for corporate investment. Often, however, firms also use commercial banks as a source of funds. The banking system provides economies of scale in terms of transactions costs to both large and small corporations. Small companies cannot always make efficient use of capital markets due to their relatively small demands or the cost of informing the market of these demands. Larger companies whose demands are for short periods of time, or which have a possibility of an impending change in financing, often can't justify the cost of a securities issue in the securities market.