The Interest Rate Exposure of Nonfinancial Corporations

Posted: 21 Jun 2002

See all articles by Söhnke M. Bartram

Söhnke M. Bartram

Warwick Business School - Department of Finance; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper


Many interest rates are as volatile as exchange rates and thus represent an equally important source of risk for corporations. While this is true not only for financial institutions, but for other corporations as well, little is known about the interest rate exposure of nonfinancial firms. Consequently, this paper investigates the impact of interest rate risk on a large sample of nonfinancial corporations. It presents empirical evidence for the existence of linear and nonlinear exposures with regard to movements in various interest rate variables. The interest rate exposure is empirically determined by measures of firm liquidity, but not by financial leverage.

Keywords: Interest rates, exposure, derivatives, risk management, corporate finance, capital markets

JEL Classification: G3, F4, F3

Suggested Citation

Bartram, Söhnke M., The Interest Rate Exposure of Nonfinancial Corporations. European Finance Review, Vol. 6, No. 1, pp. 101-125, 2002; WBS Finance Group Research Paper No. 24. Available at SSRN:

Söhnke M. Bartram (Contact Author)

Warwick Business School - Department of Finance ( email )

Coventry, CV4 7AL
United Kingdom
+44 (24) 7657 4168 (Phone)
+1 425 952 1070 (Fax)


Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

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