Determinants of Foreign Currency Borrowing in the New Member States of the EU

26 Pages Posted: 12 Sep 2008

See all articles by Christoph B. Rosenberg

Christoph B. Rosenberg

International Monetary Fund (IMF) - European Department

Marcel Tirpak

International Monetary Fund (IMF)

Date Written: July 2008

Abstract

The paper investigates the determinants of foreign currency borrowing by the private sector in the new member states of the European Union. We find that striking differences in patterns of foreign currency borrowing between countries are explained by the loan-to-deposit ratios, openness, and the interest rate differential. Joining the EU appears to have played an important role, by providing direct access to foreign funding, offering hedging opportunities through greater openness, lending credibility to exchange rate regimes, and raising expectations of imminent euro adoption. The empirical evidence suggests that regulatory policies to slow foreign currency borrowing have had only limited success.

Keywords: Europe, European Union, External borrowing, Private sector, Foreign investment, Exchange rate regimes, Euro

Suggested Citation

Rosenberg, Christoph and Tirpak, Marcel, Determinants of Foreign Currency Borrowing in the New Member States of the EU (July 2008). Available at SSRN: https://ssrn.com/abstract=1266506 or http://dx.doi.org/10.2139/ssrn.1266506

Christoph Rosenberg (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Marcel Tirpak

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
356
Abstract Views
2,307
rank
110,060
PlumX Metrics