Financial constraints and growth
Subtitle: Multinational and local firm responses to currency crises
By: Mihir A. Desai, C. Fritz Foley, Kristin J. Forbes.
Contributors: Foley, C. Fritz.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10545; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10545.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: International business enterprises -- United States.; Currency question -- United States.
Description: "This paper studies the effects of financial constraints on firm growth by investigating if large depreciations differentially impact multinational affiliates and local firms in emerging markets.  U.S.  multinational affiliates increase sales, assets and investment significantly more than local firms during, and subsequent to, currency crises.  The enhanced relative performance of multinationals is traced to their ability to use internal capital markets to capitalize on the competitiveness benefits of large depreciations.  Investment specifications indicate that increases in leverage resulting from sharp depreciations constrain local firms from capitalizing on these investment opportunities, but do not constrain multinational affiliates.  Multinational parents also infuse new capital in their affiliates after currency crises.  These results indicate another role for foreign direct investment in emerging markets multinational affiliates expand economic activity during currency crises when local firms are most constrained"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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