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

Bougheas, Spiros; Lim, Hosung; Mateut, Simona; Mizen, Paul; Yalcin, Cihan

Authors

Spiros Bougheas spiros.bougheas@nottingham.ac.uk

Hosung Lim

Simona Mateut

Paul Mizen paul.mizen@nottingham.ac.uk

Cihan Yalcin



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.

Journal Article Type Article
Publication Date Jan 11, 2018
Journal European Journal of Finance
Print ISSN 1351-847X
Electronic ISSN 1466-4364
Publisher Taylor & Francis (Routledge)
Peer Reviewed Peer Reviewed
Volume 24
Issue 17
Pages 1649-1671
APA6 Citation Bougheas, S., Lim, H., Mateut, S., Mizen, P., & Yalcin, C. (2018). Foreign currency borrowing, exports and firm performance:evidence from a currency crisis. European Journal of Finance, 24(17), 1649-1671. doi:10.1080/1351847X.2017.1421246
DOI https://doi.org/10.1080/1351847X.2017.1421246
Keywords Currency crisis; Exports; Foreign currency borrowing
Publisher URL https://www.tandfonline.com/doi/full/10.1080/1351847X.2017.1421246
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
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....0/1351847X.2017.1421246

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FCB-complete-EJF accepted Dec 17.pdf (815 Kb)
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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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