I document that floating-rate loans from banks (particularly important for bank-dependent
firms) drive most variation in firms' exposure to interest rates. I argue that banks lend to firms
at floating rates because they themselves have floating-rate liabilities, supporting this with
three key findings. Banks with more floating-rate liabilities, first, make more floating-rate
loans, second, hold more floating-rate securities, and third, quote lower prices for floating-rate
loans. My results establish an important link between intermediaries' funding structure and the
types of contracts used by non-financial firms. They also highlight a role for banks in the
balance-sheet channel of monetary policy.
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