Evaluating Effects of Exchange Rate Uncertainty on Financing of Firms and Foreign Direct Investment in Iran

Faslnāmah-i Pizhūhish/Nāmah-i Iqtisādī

关键词: Financing;    Foreign Direct Investment;    Exchange Rate Uncertainty;    Autoregressive Distributed Lags;    Panel Data;   

DOI  :  10.22054/JOER.2018.8563

来源: DOAJ

【 摘 要 】

In general, development of infrastructures and implementation of economic projects require financing. However, the exchange rate fluctuations lead to increasing costs of financing through conversion, transaction, economic, credit and liquidity risks. Hence, in this study, the effect of the exchange rate volatilities has been investigated on financing practices of companies listed in Tehran Stock Exchange using autoregressive distributed lags method during monthly period 2006-2015 and then, the effect of this variable has been determined on foreign direct investment (FDI) inflow in economic sectors of Iran using panel data method during 1994-2015. According to the results, the value of assets, stock price index, economic freedom index, inflation rate and exchange rate volatilities are identified as determinants of firms’ financing. Also, the pattern of FDI is a function of sectoral value-added growth, capital productivity index, inflation rate, economic freedom index and the exchange rate volatilities where the coefficients are significant and consistent with theoretical expectations. Furthermore, increasing exchange rate fluctuations can decrease domestic and foreign financing because exchange rate fluctuations lead to different risks.

【 授权许可】

Unknown