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Corporate Debt Structure with Home and International Currency Bias

Author

Listed:
  • Matteo Maggiori

    (Stanford Graduate School of Business, NBER and CEPR)

  • Brent Neiman

    (University of Chicago, Booth School of Business, NBER, and CEPR)

  • Jesse Schreger

    (NBER, and CEPR)

Abstract

We explore the consequences of global capital market segmentation by currency for the optimal currency composition of borrowing by firms. Global bond portfolios are driven by the currency of denomination of assets as investors prefer to lend in their home currency or the international currency, the US Dollar. Larger and more productive firms select into foreign currency issuance. International segmentation results in a quantity dimension of the exorbitant privilege whereby US firms that only issue in the domestic currency benefit from being able to more easily borrow from global investors.

Suggested Citation

  • Matteo Maggiori & Brent Neiman & Jesse Schreger, 2025. "Corporate Debt Structure with Home and International Currency Bias," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 73(2), pages 433-456, June.
    • Handle: RePEc:pal:imfecr:v:73:y:2025:i:2:d:10.1057_s41308-024-00254-x
    DOI: 10.1057/s41308-024-00254-x
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    Keywords

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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F3 - International Economics - - International Finance
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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