Monetary Policy in Response to Corporate Debt-Financed Investment During Covid-19 : a comparative analysis of Sweden and Finland

Abstract

The thesis will analyse how the European Central Bank and the Swedish Riksbank influenced corporate debt-financed investment in Finland and Sweden during the Covid-19 pandemic. The paper will research the monetary policy measures, their transmission through credit markets and corporate investment and the real economic responses to unconventional financial conditions. Lastly, it will cover the comparative effectiveness of the two central banks’ interventions.

Findings confirm that while both banks stabilized financial conditions, overall corporate investment remained restrained due to uncertainty and structural factors. In the comparison, Sweden’s flexible market-oriented landscape, along with looser domestic restrictions, resulted in a faster recovery in investment compared to Finland’s bank-based financing structure. In regard to both economies, monetary policy operations alone were insufficient to revive investment without fiscal support and recovered business confidence.