Author:
Fu Yongshuang,Du Jiayi,Wang Yajie
Abstract
This empirical study explores the determinants of foreign currency debt financing for export-oriented companies, utilizing panel data from Chinese listed companies spanning the period 2015-2019. Across the entire sample, raising foreign currency debt appears to serve as a natural hedging mechanism; employing foreign exchange hedging instruments effectively mitigates foreign exchange risks for these firms. Subsequent analysis demonstrates that industry variations can introduce risk exposure in foreign currency debt, with hedging instruments and foreign debt acting as effective complements or substitutes for risk prevention. Additionally, corporate characteristics, debt term structure, and internationalization level significantly influence the use of foreign currency debt and exposure to foreign exchange risks.
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