International Trade and the Currency Composition of Corporate Debt
Speaker
Prof. Kwon Ohyun
(Drexel University)
Time & Date
09:00-10:30 AM
2020/12/25 (Friday)
Seminar Registration
smeseminar@cuhk.edu.cn
Abstract
This paper provides the first causal evidence on how firms' export shares affect their currency compositions of debts. To address the endogeneity associated with export shares, we instrument them with South Korea's trading partners' industry level demand shocks. Cross-sectional patterns, long difference and IV regression results jointly confirm our theoretical prediction that firms with higher export shares borrow larger shares of debts in foreign currency. We further validate our theory by showing that: (1) our results are robust when we drop firms that potentially use financial hedge against exchange rate risks, (2) the effects of export shares become less pronounced under a less flexible exchange rate regime, (3) and higher import shares of intermediate inputs lower firms' foreign currency debt shares. These findings shed light on the discussion of exchange rate policy in developing countries where foreign currency debts are pervasive.
Prof. Kwon Ohyun
(Drexel University)
Prof. Kwon Ohyun is an economist specializing in the study of international trade. His recent research focus includes the impact of trade liberalization on environment, the role of currency in international trade and the economic impact of international sanctions. He received his bachelor's degree in Finance from Peking University in 2012 and his Ph.D. from University of Wisconsin-Madison in 2019. He joined the Economics Department at Drexel University in the Fall of 2019.
Academic Seminar Series Launching
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