TY - JOUR
T1 - International Reserve Management and Firm Investment in Emerging Market Economies
AU - Aizenman, Joshua
AU - Cheung, Yin Wong
AU - Qian, Xingwang
N1 - Publisher Copyright:
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2024.
PY - 2025/4/1
Y1 - 2025/4/1
N2 - We examine the effects of active international reserve management (IRM) conducted by central banks of emerging market economies (EMEs) on firm investment in the presence of global financial shocks. Using firm-level data from 46 EMEs from 2000 to 2018, we document three findings. First, active IRM is found to affect firm investment positively. The effect strengthens when the magnitude of adverse external financial shocks increases. Second, financially constrained firms, compared to unconstrained ones, are less responsive to active IRM. Third, we find that 30% of the causal effect of IRM on firm investment is mediated through the country credit spread channel.
AB - We examine the effects of active international reserve management (IRM) conducted by central banks of emerging market economies (EMEs) on firm investment in the presence of global financial shocks. Using firm-level data from 46 EMEs from 2000 to 2018, we document three findings. First, active IRM is found to affect firm investment positively. The effect strengthens when the magnitude of adverse external financial shocks increases. Second, financially constrained firms, compared to unconstrained ones, are less responsive to active IRM. Third, we find that 30% of the causal effect of IRM on firm investment is mediated through the country credit spread channel.
KW - Firm investment
KW - Global financial shocks
KW - International reserve management
UR - https://www.scopus.com/pages/publications/85193971040
U2 - 10.1007/s11079-024-09768-3
DO - 10.1007/s11079-024-09768-3
M3 - Article
AN - SCOPUS:85193971040
SN - 0923-7992
VL - 36
SP - 503
EP - 540
JO - Open Economies Review
JF - Open Economies Review
IS - 2
ER -
