Balance-Sheet Effects of Exchange Rate Depreciation: Evidence from Non-Financial Firms in Indonesia

Sahminan Sahminan

No WP/6/2009, Working Papers from Bank Indonesia

Abstract: The effect of exchange rate depreciation on the balance-sheet of non-financial firms has been a major issue in international finance. In this paper we test and estimate the balance sheet effects of exchange rate depreciation in non-financial firms in Indonesia. Using a sample of publicly traded non-financial firms in The Jakarta Stock Exchange (JSX) we found that in the investment in current assets, the balance-sheet-effect of the exchange rate depreciation dominates its competitiveness effect. On the other hand, the presence of balance-sheet effect is not significant in the investment in inventories.

Keywords: Balance-Sheet Effect; Exchange Rate; Indonesia (search for similar items in EconPapers)
JEL-codes: C23 E22 F31 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2006
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Citations: View citations in EconPapers (2)

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