02020cas a2200241 a 4500 AALejournalIMF011728 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463939052 1018-5941 BD-DhAAL BD-DhAAL Kamil, Herman. How Do Exchange Rate Regimes Affect Firms' Incentives to Hedge Currency Risk? : Micro Evidence for Latin America / Herman Kamil. Washington, D.C. : International Monetary Fund, 2012. 1 online resource (54 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Using a unique dataset with information on the currency composition of firms' assets and liabilities in six Latin-American countries, I investigate how the choice of exchange rate regime affects firms' foreign currency borrowing decisions and the associated currency mismatches in their balance sheets. I find that after countries switch from pegged to floating exchange rate regimes, firms reduce their levels of foreign currency exposures, in two ways. First, they reduce the share of debt contracted in foreign currency. Second, firms match more systematically their foreign currency liabilities with assets denominated in foreign currency and export revenues--effectively reducing their vulnerability to exchange rate shocks. More broadly, the study provides novel evidence on the impact of exchange rate regimes on the level of un-hedged foreign currency debt in the corporate sector and thus on aggregate financial stability. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2012/069 Full text available on IMF http://elibrary.imf.org/view/journals/001/2012/069/001.2012.issue-069-en.xml IMF e-Library