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Foreign Currency Borrowing, Exports and Firm Performance: Evidence from a Currency Crisis

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  • Spiros Bougheas
  • Hosung Lim
  • Simona Mateut
  • Paul Mizen
  • Cihan Yalcin

Abstract

This paper develops a simple signalling model of foreign currency borrowing that yields predictions about firm survival and performance during a currency crisis. Using a large panel of firm level data for South Korea we offer empirical support for the predictions of our model. It demonstrates that although firms that borrow in foreign currency are more likely to exit after the currency collapses, those that survive perform better. Among them, the best performers are exporters whose foreign sales are now more competitive.

Suggested Citation

  • Spiros Bougheas & Hosung Lim & Simona Mateut & Paul Mizen & Cihan Yalcin, 2018. "Foreign Currency Borrowing, Exports and Firm Performance: Evidence from a Currency Crisis," Working Papers 1801, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1801
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    Cited by:

    1. Małgorzata Skibińska, 2018. "Transmission of monetary policy and exchange rate shocks under foreign currency lending," Post-Communist Economies, Taylor & Francis Journals, vol. 30(4), pages 506-525, July.
    2. Ma Degong & Farid Ullah & Muhammad Sualeh Khattak & Muhammad Anwar, 2018. "Do International Capabilities and Resources Configure Firm’s Sustainable Competitive Performance? Research within Pakistani SMEs," Sustainability, MDPI, vol. 10(11), pages 1-16, November.
    3. Subhadip Mukherjee & Soumyatanu Mukherjee & Tapas Mishra & Udo Broll & Mamata Parhi, 2021. "Spot exchange rate volatility, uncertain policies and export investment decision of firms: a mean-variance decision approach," The European Journal of Finance, Taylor & Francis Journals, vol. 27(8), pages 752-773, May.

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    More about this item

    Keywords

    Currency crisis; Exports; Foreign currency borrowing;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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