Crime is a major concern in the U.S., with implications for the allocation of resources due to the uncertainty associated with it. This paper examines whether the U.S. state property crime rate is a source of uncertainty that induces lenders to increase and tighten covenants as a result of increased risk. I found that greater crime exposure by borrowers leads lenders to impose higher and tighter covenants. The results remain robust to various covenant intensity measures and are not driven by endogeneity. A difference-in-difference test shows that a firm's relocation to a higher-crime-prone state significantly increases covenant intensity. I explore two potential channels that drive the effect of property crime: earnings volatility and reduced collateral value of firms operating in crime-ridden states. I find that covenants and spreads are complementary factors in the presence of higher property crimes.

中文翻译：

---

 犯罪与契约


犯罪是美国的一个主要问题，由于其相关的不确定性而对资源分配产生影响。本文探讨了美国国有财产犯罪率是否是不确定性的一个来源，导致贷款人因风险增加而增加和收紧契约。我发现，借款人犯罪风险的增加导致贷款人施加更高、更严格的契约。结果对于各种契约强度衡量标准仍然稳健，并且不受内生性驱动。双重差分检验表明，公司搬迁到犯罪倾向较高的州会显着提高契约强度。我探讨了推动财产犯罪影响的两个潜在渠道：收益波动和在犯罪猖獗的州运营的公司的抵押品价值降低。我发现契约和利差在出现较高的财产犯罪时是互补的因素。