Purpose – The purpose of this paper is to use a unique hand-collected data set from India to investigate whether firms with multiple banking relationships that are in bankruptcy get additional loans more easily than those with a single banking relationship. The authors find that firms that have a single banking relationship increase their bank borrowing by 5 percent every year compared to those with multiple banking relationships. The results are in contrast to the hypothesis that firms choose to have multiple banking relationships to increase the probability of getting additional loans in cases of financial distress. The results are consistent with the hypothesis that a larger number of banks increases the coordination and bargaining costs during bankruptcy and decreases the liquidation value of the assets, and that the banks take that into consideration before making loans. Design/methodology/approach – Regression and control. Findings – The choice of single vs multiple banking relationships is a widely studied topic in the banking literature. A large strand of theoretical and empirical literature argues that multiple banking relationships make it easier for a firm to get additional loans in case of financial distress. The study shows that such may not be the case in instances where bargaining and co-ordination costs due to poor bankruptcy procedures are severe. Originality/value – The authors use a unique hand collected data set from India to investigate if it is easier to get additional loans in bankruptcy for firms with multiple banking relationships compared to those with a single banking relationship.

Multinational enterprises (MNE) operating in emerging countries are exposed to various types of risk.   Exchange rate risk is an important and anticipated part of MNE’s total risk exposure, with a variety of tools available to mitigate that risk. In this study, we focus on transaction exposure of cash flows in eight distinctive emerging market currencies and employ the Modified Value-at-Risk (MVaR) model to estimate the maximum one-period loss during an eighteen-month period spanning pre- and post-Covid-19 periods. The predicted losses by MVaR are then compared to the ex-post results, to identify any differences in the pre- and post-Covid-19 periods and to determine the need for adjustments in hedging strategies by MNEs during similar global crises. The motive of this research is to understand the limitations of hedging and what MNEs can do to mitigate transaction exposure risk. The results provide insights on whether MNEs should hedge their currency risk or not. The COVID-19 pandemic did impact all firms globally, so this study is relevant and pertinent as firms plan their post-pandemic growth.

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