There were 19 press releases posted in the last 24 hours and 161,508 in the last 365 days.

Why Do Bank-Dependent Firms Bear Interest-Rate Risk?

Author/Editor:

Divya Kirti

Publication Date:

January 18, 2017

Electronic Access:

Free Full text (PDF file size is 736 KB).Use the free Adobe Acrobat Reader to view this PDF file

HTML Content

Summary:

I document that floating-rate loans from banks (particularly important for bank-dependent firms) drive most variation in firms' exposure to interest rates. I argue that banks lend to firms at floating rates because they themselves have floating-rate liabilities, supporting this with three key findings. Banks with more floating-rate liabilities, first, make more floating-rate loans, second, hold more floating-rate securities, and third, quote lower prices for floating-rate loans. My results establish an important link between intermediaries' funding structure and the types of contracts used by non-financial firms. They also highlight a role for banks in the balance-sheet channel of monetary policy.


EIN Presswire does not exercise editorial control over third-party content provided, uploaded, published, or distributed by users of EIN Presswire. We are a distributor, not a publisher, of 3rd party content. Such content may contain the views, opinions, statements, offers, and other material of the respective users, suppliers, participants, or authors.