Financial intermediaries issue the majority of liquid securities, and nonfinancial firms have become net savers, holding intermediaries' debt as cash. This paper shows that intermediaries' liquidity creation stimulates growth -- firms hold their debt for unhedgeable investment needs -- but also...

Low interest rate environment encourages borrowing. During inevitable downturns in business cycles, heavy borrowing makes it more vulnerable to financial crisis. Low interest rate environments also favor high fixed cost investments, which have low variable costs and hence, have more significant...

We provide empirical evidence of the causal effects of changes in financial intermediaries' net worth on the aggregate economy. Our strategy identifies financial shocks as high-frequency changes in the market value of intermediaries' net worth in a narrow window around their earnings...

In this study, U.S. manufacturing firms' profitability measures including profit margins and returns on equity are examined over the 1971-2005 period. We find strong support for the “insulation hypothesis” as our results show that the profitability ratios and the valuation multiples of U.S....

In this study, U.S. manufacturing firms' short-term financial management measures including net working capital, inventory turnover and receivables turnover are examined over the 1971-2005 period. The impacts of firm size, profitability, tangibility, market-to-book ratio, leverage, as well as...

This paper investigates the role of executive compensation in the transmission of monetary shocks to corporate investments. We find that a managerial compensation structure that facilitates risk-taking (high Vega) is a positive and significant contributor to the translation of monetary shocks...

This paper evaluates the role of multinational activities on the transmission of monetary policy. I document that U.S. multinationals are more responsive to monetary policy than their domestic peers. Following monetary policy loosening, the increase in investment is larger for U.S. firms with...

This paper assesses the differences in how nonfinancial firms respond to high frequency identified monetary policy shocks conditional on various measures of their financial conditions. In line with the effects of monetary policy shocks on real aggregate activity, the most significant disparities...

Negative interest rates are a new phenomenon. Short-term deposit rates of the European Central Banks became negative in 2014 and sovereign debts of highly solvent countries followed. This paper measures the effect of short-term rates on short-term financial variables and of long-term rates on...

Aim: The paper measures the impact of negative interest rates on listed firms in the original euro zone countries. It also measures the impact of the first COVID-19 year. Design / research methods: The paper uses panel data to measure the influence of the short-term ECB deposit rate and the...