Banerjee, Ryan; Hofmann, Boris; Mehrotra, Aaron N. - 2020
Using firm-level data for 18 major global economies, we find that the exchange rate affects corpo-rate investment … through a financial channel: exchange rate depreciation dampens corporate invest-ment through firm leverage and FX debt. These … findings are consistent with the predictions of a stylised model of credit risk in which exchange rates can affect investment …