The boom of corporate debt in emerging markets: Carry trade or save to invest?

• 成果类型: Article
• 署名作者: De Gregorio, Jose; Jara, Mauricio
• 署名单位: Universidad de Chile
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103844
• 发表日期: 2024
• 关键词: emerging markets; Offshore debt; Carry trade; Corporate investment

摘要

The decline in international interest rates following the global financial crisis encouraged firms in emerging markets to increase their corporate bond issuance abroad. Evidence shows that issuing offshore debt increases cash holdings, suggesting firms may exploit interest rate arbitrage. We argue that increasing contemporaneous cash holdings may also be undertaken for a save to invest motive to finance future investment opportunities. Using a sample of nonfinancial listed firms from 15 emerging market economies from 2001 to 2016, we show that companies accumulate cash when carry trade is favorable; however, we find that the increased cash holdings substantially revert in the following two periods, consistent with arguments for a save to invest motive. Indeed, offshore debt has a significant impact on both current and next-year investment.