Work

Corporate sector liability dollarization and exchange rate balance sheet effect in Turkey

Year: 2011

Type: article

Abstract: In this study, we investigate the causes and balance sheet effect consequences of Liability Dollarization (LD) of nonfinancial sectors in Turkey. The dynamic panel data Generalized Method of Moments (GMM) results suggest that both sector specific and macroeconomic variables are significant in explaining the corporate sector LD. Industries appear to partially match the currency composition of their debt with their income streams. Devaluations are found to be contractionary, in terms of investments and profits, for sectors with higher LD. Macroeconomic instability affects the performance of the industries negatively. Our results also stress the importance of strong macroeconomic policy stance for an endogenous dedollarization process.

Source: Applied Economics

DOI: 10.1080/00036846.2010.498353

Authors: Mehtap Kesriyeli, Erdal Özmen, Serkan Yiğit

Institutions: Central Bank of the Republic of Turkey, Middle East Technical University

Language: English

Topic: Global Financial Crisis and Policies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W2079980367

FWCI: 2.964

Cites: 21

Cited by: 34

Related to: 10