Why would low interest rates lead to greater corporate concentration (to monopoly and dominant positions)?

We will illustrate our analysis with the case of the United States. It is striking to see the co-occurrence between the fall in interest rates and the increase in corporate concentration. Via what mechanisms would abnormally low interest rates lead to greater corporate concentration (to the appearance of dominant and monopoly positions)? One might think that: If interest rates are very low, then in the presence of growing returns to scale, it is easier for the largest companies to accumulate capital and take advantage of these growing returns to scale; As the discount rate of future profits is lower, the discounted earnings of a more efficient company rise more when interest rates fall than those of a less efficient company , leading the more efficient company to invest more in response to the low interest rates. 1 G reater corporate concentration, leading those companies that have acquired monopoly power to increase productivity less, may therefore explain why low interest rates could be associated with low productivity gains. Th e theoretical basis of this idea is developed in: E. Liu, A. Mian , A. Sufi (2019). “Low Interest Rates, Market Power and Productivity Growth”, NBER Working Paper no. 25505, January.