Volume 2, Number 1 / March , Pages 1-83
Financial Liberalization and the Exchange-Rate Exposure of the Taiwanese Firms: A Nonparametric Analysis of Taiwan
Multinational Finance Journal, 1998, vol. 2, no. 1, pp. 37-61
Jang-Ting Guo , University of California–Riverside, U.S.A.    Corresponding Author
Rong-Chang Wu , Shin Chien University, Taiwan

This article adopts a nonparametric approach to examine the exchange-rate exposure of Taiwanese firms between December 1979 and January 1995. The evidence indicates that financial liberalization that took place in July 1987 has introduced an important structural break to firms' foreign exchange exposure. In the pre-liberalization period, no industry shows significant exposure to changes in the exchange rate. By contrast, in the post-liberalization period, exchange-rate movements exert significant contemporaneous and lagged impacts on the value of firms, particularly those with high involvement in international trade

Keywords : financial liberalization; foreign exchange exposure effect; nonparametric econometrics
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