Foreign currency borrowing is widespread in many regions of the world. This raises the question whether unhedged … and, secondly, that knowledge about the exchange rate risk lowers the demand for foreign currency borrowing. To assess the … perspective, a misunderstanding of the underlying risks is not the main cause of foreign currency borrowing. …

lower domestic interest rate expands the supply of credit in the domestic but not in the foreign currency. A lower foreign …

In this paper, we investigate whether foreign currency accounts help overcome credit constraints in developing … countries. We analyze a novel bank-level data set from Nepal, where a steady inflow of remittances has contributed to foreign … currency deposits on commercial bank balance sheets. In this data set we find that: (i) Banks hedge their FX exposure by …

lower domestic interest rate expands the supply of credit in the domestic but not in the foreign currency. A lower foreign …

In this paper, we investigate whether foreign currency accounts help overcome credit constraints in developing … countries. We analyze a novel bank-level data set from Nepal, where a steady inflow of remittances has contributed to foreign … currency deposits on commercial bank balance sheets. In this data set we find that: (i) Banks hedge their FX exposure by …

,200 estimated coefficients for six drivers of foreign currency lending. One common pattern we identify is that macroeconomic … instability (as expressed by inflation volatility) and banks’ funding in foreign currency play a significant role in explaining …

currency substitution, namely, the factors representing the usefulness of a foreign currency both as a medium of exchange and a … differential to correctly represent expected changes in the nominal exchange rate and hence the usefulness of foreign currency as a … store of value. The empirical results indicate that the variables representing the usefulness of foreign currency both as a …