Why Isn't Business Investment More Sensitive to Interest Rates. Evidence from Surveys

• 成果类型: Article
• 署名作者: Sharpe, Steven A.; Suarez, Gustavo A.
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3473
• 发表日期: 2021
• 关键词: investment; Interest rates; hurdle rates; cost of capital; financing constraints

摘要

Using recent chief financial officer surveys, we examine the sensitivity of investment plans to interest rate expectations and find that, for most firms, investment is extremely insensitive to interest rate decreases and only modestly more responsive to increases. Firms cite ample cash holdings as the most frequent reason to explain their lack of sensitivity. This result is consistent with dynamic models of corporate behavior in which firms build cash buffers in anticipation of potential changes in external financing conditions. In the cross section, we find that the investment plans tend to be the least sensitive to interest rate changes at firms that do not expect to borrow over the coming year and firms facing less-binding financing constraints.