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Imports, Exports, and the Currency Composition of Corporate Debt

Author

Listed:
  • Yang Jiao

    (Fanhai International School of Finance, Fudan University)

  • Ohyun Kwon

    (School of Economics, Drexel University)

Abstract

This paper investigates firm-level linkage between international finance and trade. Specifically, we present evidence that Korean firms rely more on financing in foreign currency if there is a positive export shock. We address the crucial endogeneity problem by capitalizing on South Korea’s as well as its trading partners’ demand shocks. We further show that global supply chains also play an important role as higher imported intermediate input shares induce lower foreign currency debt shares. Our findings point to a firm-level hedging channel and are pertinent to exchange rate policies that aim to reduce a (developing) country’s vulnerability to exchange rate shocks.

Suggested Citation

  • Yang Jiao & Ohyun Kwon, 2025. "Imports, Exports, and the Currency Composition of Corporate Debt," Working Papers 202518, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    • Handle: RePEc:drx:wpaper:202518
    as

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    File URL: https://www.lebow.drexel.edu/sites/default/files/2025-04/202518-cgpa-imports-exports-currency.pdf
    File Function: First version, 2023
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    References listed on IDEAS

    as
    1. Yanbo Jin & Philippe Jorion, 2006. "Firm Value and Hedging: Evidence from U.S. Oil and Gas Producers," Journal of Finance, American Finance Association, vol. 61(2), pages 893-919, April.
    2. George Allayannis & Gregory W. Brown & Leora F. Klapper, 2003. "Capital Structure and Financial Risk: Evidence from Foreign Debt Use in East Asia," Journal of Finance, American Finance Association, vol. 58(6), pages 2667-2710, December.
    3. Huang, Yi & Panizza, Ugo & Portes, Richard, 2024. "Corporate foreign bond issuance and interfirm loans in China," Journal of International Economics, Elsevier, vol. 152(C).
    4. Tarek A. Hassan, 2013. "Country Size, Currency Unions, and International Asset Returns," Journal of Finance, American Finance Association, vol. 68(6), pages 2269-2308, December.
    5. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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