 Foreign currency borrowing by small firms in the transition economiesMartin Brown, Steven Ongena and Pinar Yesin Journal of Financial Intermediation, 2011, vol. 20, issue 3, 285-302 Abstract: We examine the firm- and country-level determinants of foreign currency borrowing by small firms, using information on the most recent loan extended to 3101 firms in 25 transition countries between 2002 and 2005. Our results suggest that foreign currency borrowing is much stronger related to firm-level foreign currency revenues than it is to country-level interest rate differentials. Supporting the conclusion that carry-trade behavior is not the key driver of foreign currency borrowing in our sample we find no evidence that firm-level indicators of distress costs or financial transparency affect loan currency denomination. Overall, our findings suggest that retail clients which do take foreign currency loans are better equipped to bear the corresponding currency risks than is commonly thought. Policy makers should therefore take a closer look at the characteristics of borrowers before implementing regulations which are aimed at curbing foreign currency loans. Keywords: Foreign; currency; borrowing; Competition; Banking; sector; Market; structure (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:20:y:2011:i:3:p:285-302 Access Statistics for this article Journal of Financial Intermediation is currently edited by Elu von Thadden More articles in Journal of Financial Intermediation from Elsevier |
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