Balance sheet and currency mismatch: evidence for Peruvian firms

N.R. Ramírez-Rondán

Research output: Contribution to journalArticle in a journalpeer-review


In the Peruvian economy, as in other emerging economies, a significant portion of the debt held by firms is denominated in US dollars. While an exchange rate depreciation is likely to increase firm debt and influence investment and production plans, the literature finds weak or no evidence of this balance sheet effect. In this paper, I argue that this effect is observed in firms with a significant currency mismatch. I estimate the currency mismatch (defined as assets minus liabilities in US dollars and expressed as a percentage of total assets in domestic currency) from which the exchange rate has negative effects on firms’ investment. Using financial information from 74 non-financial Peruvian firms from 2002 to 2014, I find significant balance sheet effects for firms with a currency mismatch below − 10.4%. © 2018, Springer-Verlag GmbH Germany, part of Springer Nature.
Original languageEnglish
Pages (from-to)449-473
Number of pages25
JournalEmpirical Economics
Issue number2
StatePublished - 15 Aug 2019
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2018, Springer-Verlag GmbH Germany, part of Springer Nature.


  • Balance sheet
  • Dollar debt
  • Peru

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