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The impact of interest rates on German companies- financing decisions between public debt and public equity - an analysis of the implications on the debt-to-equity ratio in the dax
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This thesis analyzes the effects of interest rates and credit risk on German companies’ public
financing decision-making from 2002 to 2022, controlling for macroeconomic indicators. The
results show that a 0.1% absolute increase in the 10-year-mid-swap rate leads to a 7.451%
decrease in weekly bond issuances in the observed dataset. In contrast to debt issuances, equity
issuances prove to be less affected by interest rates, and more impacted by credit risk in the
market. When analyzing the exposure of the DAX’ debt-to-equity ratio to interest rates and
credit risk, the results show a positive correlation between the 3-month-Euribor and the debt-to-equity ratio.
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Debt-to-equity ratio Financing decisions Dax Interest rates