Companies using interest rate swaps to manage financial risks effectively.
The article explains how companies use interest rate swaps to manage risks when borrowing money. When firms want a fixed-rate loan but banks prefer floating rates, they can borrow a floating-rate loan and use a swap to convert it to a fixed rate. The study shows that companies using fixed-rate swaps tend to have lower credit ratings, higher debt levels, more floating-rate loans, and rely more on bank loans compared to those using floating-rate swaps.