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Currency Mismatches and Vulnerability to Exchange Rate Shocks: Nonfinancial Firms in Colombia
- Publication Year :
- 2017
-
Abstract
- After building up foreign currency denominated (FC) liabilities over several years, Colombian firms might be vulnerable to a shift in external conditions. We undertake three empirical exercises to better understand these vulnerabilities. First, we identify the determinants of FC borrowing. Second, we investigate the implications for real activity, finding a balance sheet effect that transmits exchange rate fluctuations to investment and is asymmetric, much stronger for depreciations than for appreciations. Finally, we find that foreign exchange derivatives are not used solely for hedging, due in part to monetary authority intervention to smooth exchange rate volatility. However, a full explanation remains open for future research.
Details
- Language :
- English
- ISBNs :
- 9781484330128 and 9781484330593
- Database :
- eBook Index
- Journal :
- Currency Mismatches and Vulnerability to Exchange Rate Shocks: Nonfinancial Firms in Colombia
- Publication Type :
- eBook
- Accession number :
- 1687324