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FX Intervention and Domestic Credit in a Partially Dollarized Economy
In this work we study the impact of FX interventions on Credit growth in Peru. Using Panel data at the firm-bank level from the Peruvian Credit Registry we find that purchases of dollars by the Central Bank are associated with reductions on the stock of credit held by Medium, Big and Corporate Firms in the Peruvian economy. We also found that the impact is stronger for firms with a higher level of debt dollarization. These results suggest that FX interventions can be seen as an additional tool for Financial stability, especially in times of large inflows of capital.
Measuring Uncertainty and Its Effects in a Small Open Economy
In the aftermath of the 2008 Global Financial Crisis (GFC), scholars and policymakers turned their attention to the role of uncertainty in amplifying the effects of economic or financial shocks on economic activity. A growing literature has focused on addressing this question. Most works find that uncertainty provides an additional transmission mechanism for recessionary shocks, which amplifies their negative effects on the economy. Nonetheless, most of these studies focus on developed economies. It is important to study the effects of uncertainty in the context of small open economies as, unlike developed countries, they are subject to uncertainty from both external and domestic sources. Al...
Impact of the Loan Guarantees Program Reactiva on the Performance of Peruvian Companies
Amid the global COVID-19 crisis, governments worldwide introduced measures to support private enterprises. This study utilizes a newly curated panel database, encompassing the financial records of firms in Peru, to investigate the impact of a substantial governmentbacked loan guarantee program, known as "Reactiva Peru", on the performance of mediumsized Peruvian firms. To address the non-random allocation of loans, our empirical approach combines matching techniques and difference-in-differences methods, drawing upon previous research (Girma et al., 2007; Heyman, 2007). Our findings reveal that the Reactiva program led to heightened liquidity levels among beneficiary firms, albeit with an associated increase in indebtedness. Regarding profitability, the observed impacts on treated companies were not notably positive, except for a modest uptick in the net profit margin. This study contributes valuable insights into the efficacy of public credit support programs during crises, highlighting both their advantages and potential trade-offs for medium-sized enterprises.
