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Corporate sector liability dollarization and exchange rate balance sheet effect in Turkey

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Author Info

  • Mehtap Kesriyeli
  • Erdal Ozmen
  • Serkan Yiğit

Abstract

In this study, we investigate the causes and balance sheet effect consequences of Liability Dollarization (LD) of nonfinancial sectors in Turkey. The dynamic panel data Generalized Method of Moments (GMM) results suggest that both sector specific and macroeconomic variables are significant in explaining the corporate sector LD. Industries appear to partially match the currency composition of their debt with their income streams. Devaluations are found to be contractionary, in terms of investments and profits, for sectors with higher LD. Macroeconomic instability affects the performance of the industries negatively. Our results also stress the importance of strong macroeconomic policy stance for an endogenous dedollarization process.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036846.2010.498353
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 43 (2011)
Issue (Month): 30 ()
Pages: 4741-4747

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Handle: RePEc:taf:applec:v:43:y:2011:i:30:p:4741-4747

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References

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  1. Philippe Aghion & Philippe Bacchetta & Abhijit Banerjee, 2001. "A corporate Balance-Sheet Approach to Currency Crises," Working Papers 01.05, Swiss National Bank, Study Center Gerzensee.
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Cited by:
  1. Fatih Ozatay, 2013. "Turkey's Distressing Dance with Capital Flows," Working Papers 1306, TOBB University of Economics and Technology, Department of Economics, revised Oct 2013.
  2. World Bank, 2011. "Turkey - Country Economic Memorandum (CEM) : Sustaining High Growth - The Role of Domestic savings : Synthesis Report," World Bank Other Operational Studies 12264, The World Bank.
  3. Fatih Ozatay, 2013. "Likely Candidates: Next BRICs? Turkey," Working Papers 1305, TOBB University of Economics and Technology, Department of Economics, revised Sep 2013.

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