OUR WORK
BSQE – Interest rate effects of the Swiss policy intervention
RESEARCH PAPER
Interest rate effects of the Swiss policy intervention in January 2015
2021
This study examines the impact of a significant interest rate cut by the Swiss National Bank (SNB) in early 2015 on Swiss firms. Leveraging the removal of the exchange rate floor and a sudden interest rate reduction, we find that even negative interest rates stimulate firm activity. Specifically, Swiss firms’ investment and employment growth outpaced comparable German firms by 8pp and 7.5pp, respectively, over four years. Smaller and financially constrained firms showed stronger responses, with faster funding rate declines and heightened debt, investment, and employment growth. Additionally, weaker firms increased investments, suggesting improved funding conditions helped them remain viable.
The research paper also provided the basis for the following scientific publication “Domestic financial conditions and MNCs’ global competitiveness: evidence from the Swiss franc shock”: