Interest rate risk management with debt issues: Evidence from Europe

Frédéric Délèze, Timo Korkeamäki*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)

Abstract

In comparison to bank financing, public debt market may allow firms to more readily match maturity and risk structures between their assets and liabilities. We test whether new issuers on the European corporate bond markets experience a change in their interest rate sensitivity upon their bond issuance. We find that stock returns have become significantly less sensitive to interest rate fluctuations for firms that enter the publicly traded bond market. Our findings support the notion that firms manage their interest rate risk with new debt issues.

Original languageEnglish
Pages (from-to)1-11
Number of pages11
JournalJOURNAL OF FINANCIAL STABILITY
Volume36
DOIs
Publication statusPublished - 1 Jun 2018
MoE publication typeA1 Journal article-refereed

Keywords

  • Euro
  • Interest rate risk
  • Risk management

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