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On the determinants of aggregate currency mismatch

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  • Baek, Seung-Gwan

Abstract

This paper examines the determinants of aggregate currency mismatch using the panel data set of Lane and Shambaugh, covering 97 countries over 1990–2004. The estimation results show that both domestic and international factors matter. Strengthening domestic policies and institutions is necessary but not sufficient for controlling currency mismatches in developing and emerging economies. A country should be financially liberalized and open, develop domestic securities markets, prudentially supervise financial intermediaries, upgrade institutional quality, and adopt credible monetary policies. However, a choice of exchange-rate regime does not impact currency mismatching.

Suggested Citation

  • Baek, Seung-Gwan, 2013. "On the determinants of aggregate currency mismatch," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 623-637.
  • Handle: RePEc:eee:jpolmo:v:35:y:2013:i:4:p:623-637
    DOI: 10.1016/j.jpolmod.2012.05.018
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    References listed on IDEAS

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    Cited by:

    1. Roberto Alvarez & Erwin Hansen, 2017. "Corporate Currency Risk and Hedging in Chile: Real and Financial Effects," IDB Publications (Working Papers) 97976, Inter-American Development Bank.
    2. Ye, Min & Hutson, Elaine & Muckley, Cal, 2014. "Exchange rate regimes and foreign exchange exposure: The case of emerging market firms," Emerging Markets Review, Elsevier, vol. 21(C), pages 156-182.

    More about this item

    Keywords

    Currency mismatch; Financial reform; Institutional quality;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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