Brown, Martin; Ongena, Steven; Yesin, Pınar Ayşe Yeşin - Schweizerische Nationalbank (SNB) - 2012
We model the choice of loan currency in a framework which features a trade-off between lower cost of debt and the risk of firm-level distress costs. Under perfect information, if foreign currency funds come at a lower interest rate, all foreign currency earners as well as those local currency...