Following the publication of FAS 166 and 167, the federal banking agencies adopted new rules requiring banking organizations to hold risk-based and leverage capital against assets  3  4  This work is explained on the website of the Federal Reserve Bank of New York.
Against such a backdrop, average interest payment on firms’ interest bearing debt has declined to around 1.5 percent. That is an extremely low level compared with firms’ return on asset (ROA) being around 3.0–3.5 percent. Consequently, firms can now borrow a sufficient amount of funds at much lower interest rates than their own profitability.