Please use this identifier to cite or link to this item: http://hdl.handle.net/11718/24397
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dc.contributor.authorMohapatra, Sanket-
dc.contributor.authorNagar, Jay Prakash-
dc.date.accessioned2021-10-17T14:40:16Z-
dc.date.available2021-10-17T14:40:16Z-
dc.date.issued2020-08-23-
dc.identifier.citationMohapatra, S. and Nagar, J.P. (2021), "Foreign currency borrowing and firm financing constraints in emerging markets: evidence from India", Managerial Finance, Vol. 47 No. 2, pp. 121-144. https://doi.org/10.1108/MF-05-2019-0238en_US
dc.identifier.urihttps://doi.org/10.1108/MF-05-2019-0238-
dc.identifier.urihttp://hdl.handle.net/11718/24397-
dc.description.abstractPurpose First, the purpose of this study is to examine the relationship between foreign-currency debt and firms' financing constraints for India, the second-largest emerging market economy after China. Second, this study provides insights into how firms' financing constraints evolve prior to, during and after foreign currency borrowing. Third, it demonstrates the extent to which banks' ownership status and firms' characteristics influence the relationship between foreign currency borrowing and firms' financing constraints. Design/methodology/approach This study uses detailed balance sheet data for 2,512 nonfinancial listed firms in India for the 1996–2016 period to provide new evidence on the relationship between foreign currency borrowing and firms' financing constraints. This study uses a well-known measure of firms' financing constraints, the sensitivity of investment to internal cash flows (Fazzari et al., 1988, 2000; Hubbard, 1999; Love, 2003). Findings Financing constraints tend to be higher for firms with foreign currency debt exposure compared to other firms. Financing constraints are higher prior to new foreign currency borrowing (FCB), but decrease subsequently. Firms that have relationships with privately owned banks or foreign banks have higher financing constraints when undertaking new FCB than those with exclusive relationships with government-owned banks. Financing constraints for firms with FCB are higher during domestic credit booms than other periods. Nonmanufacturing firms and those with lower than median export revenues and higher than median tangible assets experience greater financing constraints compared to other firms when they undertake FCB. Originality/value The findings of this study suggest that although firms which borrow in foreign currencies are initially more financially constrained than other firms, the foreign currency borrowing reduces their financing constraints. The findings on how global and domestic macroeconomic conditions and firm-specific characteristics influence the relationship between financing constraints and foreign currency borrowing can provide directions for policy to better leverage the benefits of international financial integration.en_US
dc.language.isoenen_US
dc.publisherManagerial Financeen_US
dc.subjectForeign currency debten_US
dc.subjectFinancing constrainten_US
dc.subjectCash flowen_US
dc.subjectInvestmenten_US
dc.titleForeign currency borrowing and firm financing constraints in emerging markets: evidence from Indiaen_US
dc.typeArticleen_US
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