Title: Corporate bonds, exchange rates and business strategy

Authors: Konstantina Vartholomatou; Konstantina Pendaraki; Athanasios Tsagkanos

Addresses: Department of Business Administration of Food and Agricultural Enterprises, University of Patras, 2, G. Seferi Str. Agrinio 30100, Greece ' Department of Business Administration of Food and Agricultural Enterprises, University of Patras, 2, G. Seferi Str. Agrinio 30100, Greece ' Department of Business Administration, University of Patras, University Campus – Rio, P.O. Box 1391, Patras 26500, Greece

Abstract: We examine the relationship between corporate bonds and exchange rates in the USA and Greece highlighting asymmetries and volatility among markets. A theoretical framework is constructed to treat the issue of corporate bonds. The employed methodology concerns the QARDL-ECM that is applied to non-stationary regressors. In Greece, our key findings point that changes in corporate bonds are mainly driven by changes in exchange rates. The quantile estimates show that the strength of long-run relationship increases as the risk of default for the country diminishes. In the USA, both long-run and short-run relationships between variables are defined. The changes in exchange rates are mainly driven by changes in corporate bonds. The quantile estimates exhibit a non-symmetrical pattern of the relationship which is a clear evidence of possible financing problems in enterprises. A key contribution concerns the suggestion of a sound policy for the enterprises for attaining stable growth in an environment of financial stress and asymmetry.

Keywords: corporate bonds; exchange rates; asymmetry; QARDL-ECM.

DOI: 10.1504/IJBAAF.2021.114473

International Journal of Banking, Accounting and Finance, 2021 Vol.12 No.2, pp.97 - 117

Received: 10 Apr 2019
Accepted: 18 Sep 2019

Published online: 01 Mar 2021 *

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