DOLLARIZATION OF DEBT CONTRACTS: EVIDENCE FROM CHILEAN FIRMS

Miguel Fuentes ()

The Developing Economies, 2009, vol. 47, issue 4, 458-487

Abstract: This paper uses a new data set to estimate the causes and consequences of foreign currency debt in firms' balance sheets. The evidence from this sample of Chilean firms indicates that dollar‐denominated debt increases with firms' size and degree of exposure to foreign competition. We find evidence that dollar‐denominated debt combines with exchange rate movements to produce a negative balance‐sheet effect that reduces firms' investment in periods of strong exchange rate depreciation. This negative balance‐sheet effect is associated with long‐term debt and appears to be nonlinear in the amount of real exchange rate depreciation.

Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://doi.org/10.1111/j.1746-1049.2009.00094.x

Related works:
Working Paper: Dollarization of Debt Contracts: Evidence from Chilean Firms (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:deveco:v:47:y:2009:i:4:p:458-487

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0012-1533

Access Statistics for this article

The Developing Economies is currently edited by Katsuji Nakagane

More articles in The Developing Economies from Institute of Developing Economies Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().