Corporate Investment and the Real Exchange Rate

Dao, Mai; Minoiu, Camelia; Ostry, Jonathan D.

doi:10.2139/ssrn.3284171

SSRN Journal

2018

DOI: 10.2139/ssrn.3284171

|View full text |Cite

Corporate Investment and the Real Exchange Rate

Mai Dao

Camelia Minoiu

Jonathan D. Ostry

Help me understand this report

Search citation statements

Order By: Relevance

Paper Sections

Select...

Citation Types

Supporting

Mentioning

Contrasting

Year Published

2019

Publication Types

Select...

Article1

Relationship

Self Cite0

Independent1

Authors

Journals

Cited by 1 publication

(1 citation statement)

References 12 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Another channel (the aggregate lending channel) operates in the same direction-weaker balance sheets of banks impairs their capacity to lend and reduces firms' access to finance Dao et al (2017). derive and test an "internal financing channel" through which variations in the real exchange rate affect corporate investment and firm growth through the availability of internal financial resources.…”

mentioning

confidence: 99%

The Turning Tide: How Vulnerable are Asian Corporates?

Saadi-Sedik¹,

Jiang²

2019

IMF Working Papers

View full text Add to dashboard Cite

Using a new firm-level dataset with comprehensive information on Asian firms' FX liabilities, we show that Asia's nonfinancial corporate sector is vulnerable to a tightening of global financial conditions. Higher global interest rates and exchange rate depreciation increase the probability of default of Asian firms. A 30 percent currency depreciation is associated with a two-notch downgrade in the corporate credit rating (e.g., from A to BBB+), resulting in 7 percent of Asian firms falling into bankruptcy. But the impact is nonlinear-as the firms' FX liability increases, the balance sheet channel of exchange rate offsets, then dominates, the competitiveness channel. The balance sheet channel offsets the competitiveness channel when the share of U.S. dollar debt is between 10 and 20 percent. We also find that currency depreciation increases firm-level investment on average, but for firms with the share of FX liabilities above 20 percent, investment contracts with depreciation. JEL Classification Numbers: F31, F41, F43, G01, G10, G15, G30, G31.

show abstract

mentioning

confidence: 99%

The Turning Tide: How Vulnerable are Asian Corporates?

Saadi-Sedik¹,

Jiang²

2019

IMF Working Papers

View full text Add to dashboard Cite

show abstract

scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.

Contact Info

hi@scite.ai

10624 S. Eastern Ave., Ste. A-614

Henderson, NV 89052, USA

Blog Terms and Conditions API Terms Privacy Policy Contact Cookie Preferences Do Not Sell or Share My Personal Information

Made with 💙 for researchers

Part of the Research Solutions Family.

Corporate Investment and the Real Exchange Rate

Cited by 1 publication

References 12 publications

The Turning Tide: How Vulnerable are Asian Corporates?

The Turning Tide: How Vulnerable are Asian Corporates?

Contact Info

Product

Resources

About