Dollarization of Debt Contracts: Evidence from Chilean Firms

Miguel Fuentes ()

No 326, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.

Abstract: This paper uses a new data set to estimate the causes and consequences of foreign currency debt in rms' balance sheet. The vidence from this sample of Chilean firms indicates that dollar-denominated debt is more used by larger firms and those more exposed to foreign competition. We find evidence that dollar denominated debt combines with exchange rate movements to produce a negative balance-sheet effect that reduces firm's investment in periods of strong exchange rate depreciation. This negative balance-sheet effect is associated with long term debt and appears to be non-linear in the amount of real exchange rate depreciation.

Keywords: Balance sheet effects; currency mismatches; dollarization; macroeconomics of developing countries (search for similar items in EconPapers)
JEL-codes: F31 F49 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://www.economia.uc.cl/docs/doctra/dt-326.pdf (application/pdf)

Related works:
Journal Article: DOLLARIZATION OF DEBT CONTRACTS: EVIDENCE FROM CHILEAN FIRMS (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:326

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