We use cookies on this website to give you a better user experience. By continuing to browse the site, you are agreeing to our use of cookies. Learn more

The Effect of United States Monetary Policy on Foreign Firms: Does Debt Maturity Matter?

The Effect of United States Monetary Policy on Foreign Firms: Does Debt Maturity Matter?
Date:
26 September 2024
Tags:
Monetary policy, Financial constraints, Foreign firms, United States

Print Article:

We provide novel evidence that corporate debt maturity plays an important role in the transmission of United States (US) monetary policy to foreign firms. Using an identification strategy that explores the ex-ante maturity structure of long-term debt to predict firms’ financial positions in a given year, we show that the effect of US monetary policy shocks on foreign firms is amplified by financing constraints. After a contractionary shock, financial conditions in foreign countries become tighter, and firms with a high proportion of long-term debt maturing right after the shock significantly decrease investment and sales. We find that firms in emerging economies are much more affected by these shocks compared to those in advanced economies, and the amplification effect of US monetary policy shocks by financing constraints is present only in emerging economies.

Search ERIA.org

Latest Multimedia

Indonesia's ASEAN Chairmanship 2023 High-Level Policy Dialogue: ASEAN Digital Community 2045

ERIA Knowledge Lab Discusses Scaling Up Innovation and Digital Technology Ecosystem

Is ASEAN Ready for Electric Vehicles? | ASEAN Insights Podcast

Latest Articles

carbon neutrality, energy
4 October 2024
Editor(s)/Author(s):
This book brings together the key drivers of technology, economics, finance, and policy to[...]
call for proposals
2 October 2024
Editor(s)/Author(s):
Introduction Carbon Dioxide Capture and Utilisation (Carbon[...]