Abstract:

The currency currency retains its characteristic of being an important macro variable for developing economies. When the fluctuations in the exchange rate are especially in the direction of rise, the exchange risk is created for companies working with import entries, whether the exchange debtors in the country need. Investors who are aware of the currency risk are taking various shares for the possible currency risk. In the study, investors using currency loans included in the loans granted by commercial banks have studied whether they take loans to protect against currency risk. For this purpose, the 2003:1-2018:6 period for Turkey was tested with ARDL integration and Todo-Yamamoto (1995) causal analysis. For the purpose of the test period, a real effective currency rate was used each month in the use of credit by commercial banks, representing the currency rate and the currency rate. The results showed that the use of currency loans could take place as a way of protecting against currency risk.

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Abstract:

Exchange rates are important macro variables for developing economies. Fluctuations in exchange rates, especially upward trending movements, creates a foreign exchange risk for both debtors and firms that use imported inputs in their operations. In consideration of this, investors take on various actions to avoid possible foreign exchange risks. Thus, this study investigates whether investors borrowing foreign exchange loans from commercial banks use such credits as a means of hedging against foreign exchange risk. In this respect, ARDL cointegration and Toda-Yamamoto (1995) causality analyses are employed to study the relationship between ratio of foreign exchange loans to the total loans granted by commercial banks and real effective exchange rate in turkey for the period 2003:1-2018:6. The results of the analysis indicate that foreign exchange loans can be taken out as a means of hedging against foreign exchange risk.