Balance sheet and currency mismatch: evidence for Peruvian firms

N.R. Ramírez-Rondán

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6 Citas (Scopus)


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.
Idioma originalInglés
Páginas (desde-hasta)449-473
Número de páginas25
PublicaciónEmpirical Economics
EstadoPublicada - 15 ago. 2019
Publicado de forma externa

Nota bibliográfica

Funding Information:
I would like to thank Guillermo Moloche, Renzo Castellares, Diego Winkelried, and the anonymous referee for valuable comments and suggestions. I also thank the participants of the Third Annual Conference of The Bilateral Assistance and Capacity Building for Central Banks Program in Geneva, Switzerland; the XXXIII Meeting of Economists of the Central Bank of Peru in Lima, Peru; the 20th Annual Meeting of the Latin American and Caribbean Economic Association in Santa Cruz, Bolivia; and the 2015 Annual Congress of the Peruvian Economic Association in Lima, Peru. I am grateful to Bryce Cruz, Yamily Le?n, Nevenka Ciriaco and Andrea Vilchez for providing excellent research assistance. Special thanks to Patricia Paskov for kindly review the paper. All remaining errors are mine.

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

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