Foreign currency borrowing and risk exposure of firms: An emerging market economy viewpoint

IF 3.5 2区 经济学 Q1 ECONOMICS Journal of Policy Modeling Pub Date : 2023-11-01 DOI:10.1016/j.jpolmod.2023.09.004
Prasenjit Chakrabarti , Sudipta Sen
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Abstract

Foreign currency borrowings by emerging market corporations have increased significantly post-global financial crisis. Extant literature has mainly focussed on the flow of foreign currency borrowings, and policies which control the volatility of the flow of the foreign currency borrowings. In this paper, we emphasize the stock of the foreign currency borrowings in the balance sheet of a firm instead of the flow of the foreign currency borrowings, and show the ineffectiveness of policies focused on controlling the flow of foreign currency borrowings. We use the data of non-financial Indian firms listed in the Bombay Stock Exchange and National Stock Exchange. Our analysis show the fallacy of a policy focussed on controlling the flow of foreign currency borrowings. Despite policies which control the flow of the foreign currency borrowings, if a firm has a high stock of foreign currency borrowings in their balance sheet then the financial risk associated with the firm increases. A possible implication of our results is that too much foreign currency borrowings may pile up the risk in the financial system which may become a cause of concern.

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外币借贷与企业风险暴露:新兴市场经济视角
全球金融危机后,新兴市场企业的外币借款大幅增加。现有文献主要集中于外币借款的流动,以及控制外币借款流动波动性的政策。本文强调了企业资产负债表中外币借款的存量,而不是外币借款的流量,并表明了以控制外币借款流量为重点的政策的有效性。我们使用在孟买证券交易所和国家证券交易所上市的非金融印度公司的数据。我们的分析表明,专注于控制外币借款流动的政策是错误的。尽管有政策控制外币借款的流动,但如果一家公司的资产负债表上有很高的外币借款存量,那么与该公司相关的金融风险就会增加。我们的研究结果可能暗示,过多的外币借款可能会增加金融体系的风险,这可能成为一个令人担忧的问题。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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CiteScore
6.20
自引率
11.40%
发文量
76
期刊介绍: The Journal of Policy Modeling is published by Elsevier for the Society for Policy Modeling to provide a forum for analysis and debate concerning international policy issues. The journal addresses questions of critical import to the world community as a whole, and it focuses upon the economic, social, and political interdependencies between national and regional systems. This implies concern with international policies for the promotion of a better life for all human beings and, therefore, concentrates on improved methodological underpinnings for dealing with these problems.
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