Financial Crisis and Foreign Exchange Exposure of Korean Exporting Firms
During the Asian crisis, a rise in short-term for debt relative to short-term debt denominated in domestic currency results in a significant decline in negative exposure of Korean firms, with Chaebol firms able to benefit more. Exposure of non-Chaebol firms is significantly affected by maturity of debt. Results are consistent with recent work modeling firm level phenomena during financial crisis that emphasizes the importance of credit constraints, and with observations that exporting firms have significantly higher foreign debt ratios and eve of crisis export and foreign debt ratios are strongly correlated with growth in sales immediately after the crisis.
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