PhD student QIU Yancheng from the Department of Finance has received the CES (Chinese Economists Society) Best Student Paper Award and the ACEM (Antai College of Economics and Management) Outstanding Paper Award for his job market paper titled “Foreign Debt, Exchange Rate Exposure, and Corporate Distress”.
The paper examines how exchange rate shocks propagate corporate distress via foreign debt using data on the currency denomination of firm-level debt across 64 economies. Yancheng shows that foreign debt contributes to corporate distress and incrementally predicts bankruptcies. Exchange rate risk resulting from currency depreciation and the U.S. monetary policy shocks amplifies corporate distress via the dollar bond exposure. The fragility of foreign debt is more substantial in countries with floating exchange rate regimes and tight debt enforcement, and for firms with high growth opportunities, volatility, and dollar beta. Overall, the findings highlight the importance of foreign debt structure in exchange rate pass-through and the international spillovers of the U.S. monetary policy.
As one of the two awardees of the CES Best Student Paper Award, Yancheng received a certificate and a prize of US$500. The ACEM Outstanding Paper Award is given based on the evaluation of the submitted paper and the candidate’s performance during on-site presentation.
