Management of Exchange Rate Risk in SMEs: Reflections on Exchange Rate Pass-through and Hedging of Currency Risk

SEISENSE Journal of Management

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Field Value
 
Title Management of Exchange Rate Risk in SMEs: Reflections on Exchange Rate Pass-through and Hedging of Currency Risk
 
Creator Badshah, Imtiaz
Borgersen, Trond-Arne
 
Subject SME exports
Exchange Rates
FX-hedging
 
Description Exchange rate fluctuations represent a challenge for the internationalization of all firms, both big and small. This paper reflects on two aspects of the exchange rate challenge - (i) the exchange rate pass-through and (ii) hedging of exchange rate risk and how SMEs manage these two aspects of exchange rate risk. The exchange rate challenges that SMEs face might differ from the risks larger firms are exposed to, and their management of the risks might vary. In family-owned SMEs, longer planning horizons than listed firms might imply a weaker exchange rate pass-through, while smaller financial buffers might pull pass-through rules in the opposite direction for the same SMEs. When considering hedging, the paper argues for both operational hedging and external hedging to represent a management challenge for SMEs, pushing the exchange rate risk towards the forefront of the factors hampering internationalization among SMEs.
 
Publisher SEISENSE (PRIVATE) LIMITED
 
Date 2020-11-11
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer Reviewed Article
 
Format application/pdf
 
Identifier http://journal.seisense.com/index.php/jom/article/view/474
10.33215/sjom.v3i6.474
 
Source SEISENSE Journal of Management; Vol. 3 No. 6 (2020): SEISENSE Journal of Management; 35-49
2617-5770
 
Language eng
 
Relation http://journal.seisense.com/index.php/jom/article/view/474/129
 
Rights Copyright (c) 2020 Imtiaz Badshah, Trond-Arne Borgersen
https://creativecommons.org/licenses/by/4.0
 

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