Foreign currency borrowing, exports and firm performance: evidence from a currency crisis

Bougheas, Spiros and Lim, Hosung and Mateut, Simona and Mizen, Paul and Yalcin, Cihan (2018) Foreign currency borrowing, exports and firm performance: evidence from a currency crisis. European Journal of Finance . ISSN 1466-4364

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Abstract

This paper develops a simple signaling 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 many of the predictions of our model, while others support predictions that cannot be tested using our data. Our paper demonstrates that although firms that borrow in foreign currency are more likely to exit after the currency collapses, those that continue to produce perform better. Among them, the best performers are exporters whose foreign sales are more competitively priced under a devalued currency.

Item Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in European Journal of Finance on 11 January 2018, available online: http://www.tandfonline.com/10.1080/1351847X.2017.1421246
Keywords: currency crisis; exports; foreign currency borrowing
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
University of Nottingham, UK > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1080/1351847X.2017.1421246
Depositing User: Eprints, Support
Date Deposited: 21 Dec 2017 11:44
Last Modified: 02 Apr 2018 16:55
URI: http://eprints.nottingham.ac.uk/id/eprint/48843

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