Mar 12, 2019 11:00am to 12:30pm
1011 Evans Hall
Happening As Scheduled
We present a novel explanation for the prevalence of foreign-currency borrowing in emerging markets. First, under limited liability, foreign-currency denominated debt acts as a state-contingent claim: Borrowers maximizing profits in local currency are partly shielded from large devaluations through bankruptcy, when repaying foreign currency debt is expensive, but pay higher rates in...
Speakers: Robert Marquez, UC Davis (Speaker - Featured)