We model how an information asymmetry between the lending bank and the applying firm about the currency structure of firm revenues may affect loan currency choice. Our framework features a trade-off between the lower cost of foreign currency debt and the costs of currency induced loan default....

Implicit contracts can mitigate moral hazard in labor, credit and product markets. The enforcement mechanism underlying an implicit contract is the threat of exclusion: the Agent fears that he will lose future income if the principal breaks off the relationship. This threat may be very weak in...

This paper uses survey data for over 23,000 households from 28 transition countries in 2010 to explore how the use of household credit is related to foreign bank ownership. In countries with higher foreign bank presence we find a stronger relation between household income, education and...

We examine how bank funding structure and securitization activities affect the currency denomination of business loans. We analyze a unique dataset that includes information on the requested and granted loan currency for 99,490 loans granted to 57,464 firms by a Bulgarian bank. Our findings...

Based on survey data from 193 banks in 20 countries we provide the first bank-level analysis of the determinants of foreign currency (FX) lending in Emerging Europe. We find that FX lending by all banks, regardless of their ownership structure, is strongly determined by the macroeconomic...