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

Date

2011-01-01

Author

Kesriyeli, Mehtap
Özmen, Erdal
Yigit, Serkan

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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.

Subject Keywords

Economics and Econometrics

URI

https://hdl.handle.net/11511/41792

Journal

APPLIED ECONOMICS

DOI

https://doi.org/10.1080/00036846.2010.498353

Collections

Department of Economics, Article

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Citation Formats

M. Kesriyeli, E. Özmen, and S. Yigit, “Corporate sector liability dollarization and exchange rate balance sheet effect in Turkey,” APPLIED ECONOMICS, pp. 4741–4747, 2011, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/41792.