Why Are Overall Profits Outpacing Financing Costs?

Anton E. Bobrov, Carter Davis (), Alexandre Sollaci and James Traina
Additional contact information
Carter Davis: https://kelley.iu.edu/faculty-research/faculty-directory/profile.html?id=CKD1

FRBSF Economic Letter, 2024, vol. 2024, issue 15

Abstract: Since the 1980s, decreasing interest rates have reduced the cost of financing for publicly traded corporations, which in turn has lowered their cost of capital by more than a third. Data show that their profits have likewise declined. At the same time, however, economy-wide corporate profits have increased substantially. Combining these data indicates that the increase in profits has instead gone to privately held companies. This implies that private companies have either increased their market power or their risk.

Keywords: profits; interest rates; financing; corporations (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.frbsf.org/wp-content/uploads/el2024-15.pdf Full text - article (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfel:98399

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in FRBSF Economic Letter from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().