{
  "title": "Why Do Bank-Dependent Firms Bear Interest-Rate Risk?",
  "publication": "IMF Working Papers, January 18, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550",
  "overlayPath": "/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550/index.md",
  "summary": "I document that floating-rate loans from banks (particularly important for bank-dependent firms) drive most variation in firms' exposure to interest rates.",
  "sections": [
    {
      "heading": "Executive summary",
      "content": "- Floating-rate loans from banks drive most variation in firms' exposure to interest rates, particularly for bank-dependent firms.\n- Banks lend to firms at floating rates because banks themselves have floating-rate liabilities.\n- The results establish a link between intermediaries' funding structure and the types of contracts used by non-financial firms and highlight a role for banks in the balance-sheet channel of monetary policy."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Banks with more floating-rate liabilities make more floating-rate loans.\n- Banks with more floating-rate liabilities hold more floating-rate securities.\n- Banks with more floating-rate liabilities quote lower prices for floating-rate loans.\n- Floating-rate loans from banks are particularly important for bank-dependent firms and drive most variation in firms' exposure to interest rates."
    },
    {
      "heading": "Implications and interpretation",
      "content": "- The funding structure of banks (composition of liabilities) influences the contractual terms offered to non-financial firms.\n- Banks play a role in the balance-sheet channel of monetary policy through the interaction of their liabilities and lending contract types."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Author: Divya Kirti\n- Publication date: January 18, 2017\n- Series: IMF Working Papers\n- Working Paper No.: 2017/003\n- Issue: 003\n- Volume: 2017\n- Pages: 56\n- DOI: https://doi.org/10.5089/9781475568974.001\n- ISBN: 9781475568974\n- ISSN: 1018-5941\n- Subjects: Bank credit; Banking; Financial institutions; Financial regulation and supervision; Financial services; Hedging; Loans; Money; Securities; Short term interest rates\n- Keywords: bank assets; Bank credit; bank debt; bank holding company; bank lending; bank lending to firm; bank liabilities push bank; bank liability; bank-dependent firm; bank-dependent firms; capital structure; commercial bank; corporate finance; deposit pass-through; floating-rate loan; Hedging; Interest-rate risk; lending to firm; liabilities push bank; Loans; Securities; securities holding; Short term interest rates; WP\n\nContent based on \"Why Do Bank-Dependent Firms Bear Interest-Rate Risk?\" by Divya Kirti, IMF Working Paper No. 2017/003 (January 18, 2017).\n\n---\n\n Content in this bundle\n\n- Why do bank-dependent firms bear interest-rate risk?\n  - Why do bank-dependent firms bear interest-rate risk? (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Why do bank-dependent firms bear interest-rate risk? (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550/bundle-manifest.json)",
    "Authors: Divya Kirti",
    "Published: January 18, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475568974.001",
    "Floating-rate loans from banks drive most variation in firms' exposure to interest rates, particularly for bank-dependent firms.",
    "Banks lend to firms at floating rates because banks themselves have floating-rate liabilities.",
    "The results establish a link between intermediaries' funding structure and the types of contracts used by non-financial firms and highlight a role for banks in the balance-sheet channel of monetary policy.",
    "Banks with more floating-rate liabilities make more floating-rate loans.",
    "Banks with more floating-rate liabilities hold more floating-rate securities.",
    "Banks with more floating-rate liabilities quote lower prices for floating-rate loans.",
    "Floating-rate loans from banks are particularly important for bank-dependent firms and drive most variation in firms' exposure to interest rates.",
    "The funding structure of banks (composition of liabilities) influences the contractual terms offered to non-financial firms.",
    "Banks play a role in the balance-sheet channel of monetary policy through the interaction of their liabilities and lending contract types.",
    "Author: Divya Kirti",
    "Publication date: January 18, 2017",
    "Series: IMF Working Papers",
    "Working Paper No.: 2017/003",
    "Issue: 003",
    "Volume: 2017",
    "Pages: 56",
    "DOI: https://doi.org/10.5089/9781475568974.001",
    "ISBN: 9781475568974",
    "ISSN: 1018-5941",
    "Subjects: Bank credit; Banking; Financial institutions; Financial regulation and supervision; Financial services; Hedging; Loans; Money; Securities; Short term interest rates",
    "Keywords: bank assets; Bank credit; bank debt; bank holding company; bank lending; bank lending to firm; bank liabilities push bank; bank liability; bank-dependent firm; bank-dependent firms; capital structure; commercial bank; corporate finance; deposit pass-through; floating-rate loan; Hedging; Interest-rate risk; lending to firm; liabilities push bank; Loans; Securities; securities holding; Short term interest rates; WP",
    "**Why do bank-dependent firms bear interest-rate risk?**"
  ],
  "related": [
    {
      "title": "Why do bank-dependent firms bear interest-rate risk?",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/wp1703.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/wp1703.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/wp1703.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550/index.md",
    "json": "/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550/index.json",
    "bundleManifest": "/en/publications/wp/issues/2017/01/18/why-do-bank-dependent-firms-bear-interest-rate-risk-44550/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-18T10:55:18.461Z"
}