The Information Content in Bank Currency Mismatches in Fixed Exchange Rate Regimes
Author
Source
Issue
Vol. 2012, Issue 2012 (31 Dec. 2012), pp.1-4, 4 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2012-07-26
Country of Publication
Egypt
No. of Pages
4
Main Subjects
Abstract EN
Banks tend to leave their currency exposures uncovered in fixed and “intermediate” exchange rate regimes.
The paper asks why this is the case.
There are three possible explanations: First, hedges are costly and the currency peg is credible; Second, financial markets are incomplete and so hedging instruments are unavailable; or third, hedges are costly and banks expect a bailout should currency gyrations threaten their solvency.
The paper demonstrates that the third argument is not time consistent and therefore that uncovered currency exposures reflect currency peg credibility or financial incompleteness and not moral-hazard risk taking.
American Psychological Association (APA)
Miller, Victoria. 2012. The Information Content in Bank Currency Mismatches in Fixed Exchange Rate Regimes. ISRN Economics،Vol. 2012, no. 2012, pp.1-4.
https://search.emarefa.net/detail/BIM-488956
Modern Language Association (MLA)
Miller, Victoria. The Information Content in Bank Currency Mismatches in Fixed Exchange Rate Regimes. ISRN Economics No. 2012 (2012), pp.1-4.
https://search.emarefa.net/detail/BIM-488956
American Medical Association (AMA)
Miller, Victoria. The Information Content in Bank Currency Mismatches in Fixed Exchange Rate Regimes. ISRN Economics. 2012. Vol. 2012, no. 2012, pp.1-4.
https://search.emarefa.net/detail/BIM-488956
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-488956