​​The Impact of Global Financial Conditions on Debt Choice and Firm Performance: Evidence from the Philippines

Hazel Parcon-Santos, Carl Francis Maliwat, Alyssa Cyrielle Villanueva and Cristeta Bagsic
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Hazel Parcon-Santos: Bangko Sentral ng Pilipinas
Carl Francis Maliwat: Bangko Sentral ng Pilipinas
Alyssa Cyrielle Villanueva: Bangko Sentral ng Pilipinas
Cristeta Bagsic: Geneva Graduate Institute

No 202608, BSP Discussion Paper Series from Bangko Sentral ng Pilipinas

Abstract: This study examines how global financial conditions, captured by the VIX, US dollar movements, and the US Federal funds rate (FFR), influence Philippine firms’ currency debt choice and performance. Tighter global financial conditions are associated with a reduction in foreign currency-denominated debt relative to domestic currency-denominated debt, with the estimated relationships varying across firm types. Firm performance outcomes also vary with the source of global financial shock and firms’ pre-existing FX debt exposure. The findings suggest that global financial conditions are associated with both firms’ debt currency composition and performance. Among the global financial conditions considered, increases in funding costs—proxied by the FFR—have the most consistent negative association with firm performance.

JEL-codes: F3 F34 L25 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2026-08
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Published as BSP Discussion paper No. 2026-08, October 2026

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Persistent link: https://EconPapers.repec.org/RePEc:bhd:dpaper:202608

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