Bank of Finland

Abstract This study examines the floating rate channel —a mechanism through which monetary policy affects firms’ investment and credit demand based on their exposure to variable rate loans. Using a granular loan-level dataset from the euro area, we find that firms with variable rate loans significantly reduce their borrowing after monetary tightening, compared to firms with fixed rate loans. This effect is most pronounced among the smallest firms, consistent with the theoretical view that the floating rate channel is explained by financial constraints. Our results highlight the heterogeneity in firms’ reactions to interest rate changes and underscore the importance of accounting for firm size and financial constraints in monetary policy analysis. JEL codes: G21, G30, E52

We investigate whether a change in political leadership affects health outcomes. To do so, we exploit turnover elections that move partisan individuals into and out of alignment with the party of the President. We document that the lack of political alignment has a negative, immediate, and long-lasting effect on health. We do not find any evidence that our results can be explained by other confounding trends or by changes in economic outcomes or other economic policies. Further results suggest that political sentiments and social isolation are important potential mechanisms in this setting and that lack of political representation affects the mental health of individuals.

ABSTRACT This study investigates empirically the influence of the bankruptcy and insolvency law reform on the debt limits and the remaining debt capacity of listed manufacturing firms in Nigeria. A reformed bill was first presented in 2016, and in essence approved in 2020. The theoretical prediction that creditor rights influence corporate debt limits, or the influence of creditor rights on the remaining debt capacity, has not previously been tested. The estimations build on a stochastic frontier analysis of firm balance sheets. The analysis does not reveal any notable announcement effects or implementation effects of the reform on the firms’ debt limits. A minor fall in the remaining debt capacity of firms is found in 2020 and 2021, indicating a possible implementation effect from the reform. The debt limits of Nigerian firms remain quite high, at close to 100% of their total assets.