An Empirical Analysis of the Currency Hedging Behavior of North German SMEs

Jan Christoph Neumann
Additional contact information
Jan Christoph Neumann: Mendel University in Brno, Czech Republic

European Journal of Business Science and Technology, 2020, vol. 6, issue 1, 53-65

Abstract: In a globalized world, companies are able to sell their products or services abroad or purchase them abroad. This generates advantages due to the expansion of the business area creating a broader market but comes along with currency risks. This paper examines which factors influence German SMEs' willingness to conduct foreign business, respectively to do transactions in foreign currencies. An empirical study researches how the currency risk in North German SMEs is valued and assessed. The analysis further identifies the differences in the use of foreign currencies of rural and urban SMEs and examines the reasons for the use of foreign currencies and currency management which lead to the use of currency hedging. With a sample size of 73 SMEs the study aims for a better understanding of the foreign activities of German SMEs and investigates the approach to the currency risk management for a better understanding of their needs. In general, the paper shows that the larger a company is, the more likely is the use of a currency management. A comparison of rural and urban SMEs in Northern Germany reveals, that urban ones are larger and therefore more likely to use currency hedging. Based on the research, the paper provides recommendations for SMEs with foreign sales.

Keywords: currency hedging; currency management; importers; exporters; currency volatility; North German SMEs (search for similar items in EconPapers)
JEL-codes: A10 G30 G40 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://ejobsat.cz/doi/10.11118/ejobsat.2020.002.html (text/html)
http://ejobsat.cz/doi/10.11118/ejobsat.2020.002.pdf (application/pdf)
free of charge

Related works:
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:men:journl:v:6:y:2020:i:1:p:53-65

DOI: 10.11118/ejobsat.2020.002

Access Statistics for this article

European Journal of Business Science and Technology is currently edited by Svatopluk Kapounek

More articles in European Journal of Business Science and Technology from Mendel University in Brno, Faculty of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Ivo Andrle ().