Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202280
Authors: 
Kátay, Gábor
Péter, Harasztosi
Year of Publication: 
2017
Series/Report no.: 
JRC Working Papers in Economics and Finance No. 2017/2
Abstract: 
The paper investigates firms’ willingness to match the currency composition of their assets and liabilities and their incentives to deviate from perfect matching. Using detailed information at the loan contract level for the Hungarian non-financial corporate sector, the paper provides strong evidence to support the theory that currency matching plays a role in exporters’ debt currency choices. However, natural hedging is not the primary motivation for firms to choose foreign currency: it explains less than 5 per cent of the overall new corporate foreign currency loans contracted by exporters and less than 2 per cent of the aggregate new foreign currency bank loans. Besides hedging, our results suggest that both carry trade and diversification strategies are relevant factors in firms’ currency-of-denomination decisions.
Subjects: 
borrowing decisions
currency mismatch
carry trade
financial crisis
JEL: 
G01
G11
G32
F31
F34
Persistent Identifier of the first edition: 
ISBN: 
978-92-79-67439-6
Document Type: 
Working Paper

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