Risk and Asian exchange rate regimes

Ashima Goyal and Ankita Agarwal

MPRA Paper from University Library of Munich, Germany

Abstract: A panel regression gives evidence that more flexibility in Asian exchange rates reduces risk associated with bank borrowing abroad, but deviations from mean exchange rates, and from the renminbi, increase risk. Since the exchange rate regime affects bank behavior and the incentives to hedge, the results broadly support the bank run over the moral hazard view of twin banking and currency crisis. The results suggest that flexibility in exchange rates is required for Asian EMEs, but the flexibility has to be limited, and it depends on more flexibility in the renminbi. This has implications for current global imbalances in reserves and feasible adjustment paths.

Keywords: exchange rate flexibility; risk; hedging; moral hazard; bank runs (search for similar items in EconPapers)
JEL-codes: F3 F31 (search for similar items in EconPapers)
Date: 2005-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Global Economic Review 3.34(2005): pp. 321-329

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/24309/1/MPRA_paper_24309.pdf original version (application/pdf)

Related works:
Journal Article: Risk and Asian Exchange Rate Regimes (2005)
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:pra:mprapa:24309

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().