Firm Foreign Activity and Exchange Rate Risk

Firm Strategy and Economic Exposure to Foreign Exchange Rate Movements

Exchange Rate Exposure and Firm Dynamics

This paper develops a firm-dynamics model with heterogenous firms and endogenous currency debt composition to jointly study financing and investment decisions in developing economies. In our model, foreign currency borrowing arises from a trade-off between aggregate deviations from the risk-free uncovered interest rate parity and firms’ growth potential. Crucially, there is crosssectional heter...

Exchange Rate Uncertainty and Firm Pro

1 Introduction

Transferring and sharing exchange-rate risk in a risk-averse supply chain of a multinational firm

This paper analyzes risk management contracts used to handle currency risk in a decentralized supply chain that consists of risk-averse divisions in a multinational firm. Particular contracts of interest involve transferring risk to a third party by using risk-transfer contracts such as currency options and re-arranging risk between supply chain members using risk-sharing contracts. Due to dece...

Asian foreign exchange risk exposure

We find that about 25 percent of Asian firms experienced economically significant exposure effects to the US dollar and 22.5 percent to the Japanese yen for the period January 1993 to January 2003. The overall extent of exposure is not sample dependent; a depreciating (appreciating) Asian currency against foreign currencies has a net negative (positive) impact on stock returns. The extent to wh...