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The link between exchange rate volatility and capital structure under financial liberalization: evidence from the Turkish manufacturing sector

The link between exchange rate volatility and capital structure under financial liberalization:... The main purpose of this article is to examine the effect of exchange rate volatility on the corporate capital structure for firms in the Turkish manufacturing sector during the period of 1990–2017. This period is considered the post-financial liberalization period. This article uses a novel dynamic multiplier analysis which is based on the Panel Vector Autoregressive Model which takes into account endogeneity, firm dynamics, and omitted variable bias. The obtained findings show that real exchange rate volatility forces the firms to use their internal finance sources in the Turkish manufacturing sector even though the Turkish economy experienced a much earlier financial liberalization process than other emerging markets. In addition, the exporter, and those firms without special business group affiliates (non-TUSIAD member firms), have more exposure to real exchange volatility than their exporter and TUSIAD member peers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Eurasian Business Review Springer Journals

The link between exchange rate volatility and capital structure under financial liberalization: evidence from the Turkish manufacturing sector

Eurasian Business Review , Volume 12 (3): 33 – Sep 1, 2022

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References (112)

Publisher
Springer Journals
Copyright
Copyright © Eurasia Business and Economics Society 2021
ISSN
1309-4297
eISSN
2147-4281
DOI
10.1007/s40821-021-00184-y
Publisher site
See Article on Publisher Site

Abstract

The main purpose of this article is to examine the effect of exchange rate volatility on the corporate capital structure for firms in the Turkish manufacturing sector during the period of 1990–2017. This period is considered the post-financial liberalization period. This article uses a novel dynamic multiplier analysis which is based on the Panel Vector Autoregressive Model which takes into account endogeneity, firm dynamics, and omitted variable bias. The obtained findings show that real exchange rate volatility forces the firms to use their internal finance sources in the Turkish manufacturing sector even though the Turkish economy experienced a much earlier financial liberalization process than other emerging markets. In addition, the exporter, and those firms without special business group affiliates (non-TUSIAD member firms), have more exposure to real exchange volatility than their exporter and TUSIAD member peers.

Journal

Eurasian Business ReviewSpringer Journals

Published: Sep 1, 2022

Keywords: Corporate capital structure; Turkish manufacturing sector; Panel VAR; Exchange rate volatility; Financial liberalization; Exporter firms; TUSIAD member firms; O16; G3; G32

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