This paper examines how the geographical distance between the lead and the participant bank lenders influences syndicated loan covenants. We find that greater distance is associated with the presence of covenants, the number of covenants, and the probability
of covenant violation. These results hold when we use the introduction of new airlines to proxy the decrease in the travel time among lenders. Our results suggest that geographic proximity reduces agency conflicts among syndicated loan creditors.​

JEL classification: G21, G32, M41
Keywords: creditor coordination, geographic proximity, debt covenant