Please use this identifier to cite or link to this item:
Bris, Arturo
Koskinen, Yrjö
Pons, Vicente
Year of Publication: 
Series/Report no.: 
SSE/EFI Working Paper Series in Economics and Finance 467
Using data from 17 countries that have suffered a currency crisis, this paper studies firm-level leverage and performance measures before and after a crisis has occurred. We show that in the years preceding a currency crisis, companies that are expected to benefit from currency depreciations increase their leverage more than companies that are expected to be harmed by currency depreciations. The evidence regarding the profitability and financial fragility ratios is consistent with the leverage results, since companies that are expected to benefit from depreciations fare worse than other companies before a crisis. We also provide evidence that the Asian crisis is different from the previous European and Latin American ones: in Asia firms become more fragile after the crisis and their profitability declines and leverage increases further, whereas in Europe and Latin America there are clear signs of recovery after a crisis has occurred, especially for firms that are ex-ante expected to benefit from depreciations.
currency crises
currency depreciation
corporate leverage
capital structure
financial fragility
exchange rates
Document Type: 
Working Paper

Files in This Item:
546.48 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.