JEL Classification: F31, F34, G32, G33, L11, L14
Keywords: Corporate Debt, Financial Distress, Supply Chain, Monetary Policy Shocks, Firm-Level Data
학회소식
[2022년 5차 CAFM2022]His Pain Is Your Gain: Inter-Firm Linkages and Exchange Rate Exposure
작성자 : 관리자
조회수 : 309
게시일 :
2022-12-20
How do exchange rate shocks spread in the corporate sector? I study this question using novel multi-country firm-level data on foreign debt and production networks. I show that foreign debt borrowers experience heightened distress from the depreciation of the local currency; however, perhaps surprisingly, they do not propagate such distress to competitors or along the supply chain. Instead, domestic rivals and suppliers exploit the financial vulnerability of their connected foreign debt borrowers and gain enhanced strategic advantages in competition or supplier–customer relationships, resulting in lower credit risk and higher stock prices and future profitability. Overall, the paper highlights the importance of strategic interactions in mitigating risk contagion.
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