Why do firms default on their foreign currency loans? The case of Hungary
I isolate the effect of the choice of foreign currency on the loan performance of firms borrowing in different currencies in crisis times. I use a novel micro-level dataset from Hungary to decompose the factors contributing to the worse loan performance of foreign currency borrowers compared to local currency debtors. I find that foreign currency denomination can worsen loan performance considerably, while selection also contributes significantly to the default differences. On the one hand, per se less creditworthy firms borrowed in foreign currency and during the crisis the foreign currency shocks further weakened their loan performances. On the other hand, more creditworthy firms that were also well-prepared for the currency risks also borrowed in foreign currency. My results suggest that not the institution of foreign currency lending per se that should be blamed for the bad loan performance of foreign currency borrowers, instead one should consider the characteristics of the borrowers.
Venue: MTA HTK 1097 Budapest Tóth Kálmán u. 4. fszt. K011-12-es előadóterem We study the impact of monetary conditions on the supply of mortgage credit by banks to households. Using comprehensive credit register data from Hungary, ... Details »
Venue: MTA HTK 1097 Budapest Tóth Kálmán u. 4. fszt. K011-12-es előadóterem TBA Share this:FacebookLinkedInTwitter
Venue: MTA HTK 1097 Budapest Tóth Kálmán u. 4. fszt. K011-12-es előadóterem We use household budget data (HKÉF) for 2013-2017 to: quantify the magnitudes of permanent and transitory income shocks of Hungarian households with a working ... Details »
Does politicizing ‘gender’ influence the possibility of conducting academic research? Evidence from a randomized controlled trial by Tünde LÉNÁRD, Daniel HORN and Hubert János ... Details »
“PARENTAL JOB LOSS, SECONDARY SCHOOL COMPLETION AND HOME ENVIRONMENT” by Tamás HAJDU, Gábor KERTESI and Gábor KÉZDI was published in Acta Oeconomica. Abstract This ... Details »
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