How does FED policy change effect the investments of emerging market firms with US dollar debt?
This research investigates the reaction of emerging market firms with US dollar debt and without US dollar debt on changes in monetary policy of the Federal Reserve. More specifically this research looks at the reaction of emerging market firm invest-ments on monetary policy change of the Federal Reserve. This research makes use of the balanced panel data and pooled OLS methodology. It turns out that in the post period after monetary tightening emerging market firms with US dollar debt do invest significantly less. But given that emerging market companies already have US dollar debt, the extend of their US dollar debt plays less of a role regarding the reac-tion of the investments of emerging market firms. Smaller firms are more sensitive to monetary tightening than large firms. An explanation could be that smaller firms do face larger financial constraints and invest therefore less during period of monetary tightening. For emerging market firms without US dollar debt the variable book-to-market ratio is positive and significant and the variable market capitalisation is signi-ficant and negative. Thus indicating that growth and market valuation determine the reaction of emerging market firms without US dollar debt on change in monetary po-licy. The results are thus a little different for emerging market firms with US dollar debt and without US dollar debt. The reported parameters and significance tests are accurate and reliable given that all the assumptions of the regression analysis do hold.
|Economics of Management and Organisation|
|Organisation||Erasmus School of Economics|
Akbaba, K. (2020, June 25). How does FED policy change effect the investments of emerging market firms with US dollar debt?. Economics of Management and Organisation. Retrieved from http://hdl.handle.net/2105/52187