Real Exchange Rate, Output and Oil: Case of Four Large Energy Producers
This paper considers whether local bank participation exerts an impact on the spreads for syndicated loans in Russia. Following Berger, Klapper and Udell (2001), we test whether local banks possess a superior ability to deal with information asymmetries. Using a sample of 528 syndicated loans to Russian borrowers, we perform regressions of the spread on a set of variables including information on local bank participation and the characteristics of loans and borrowers. Unlike earlier studies, we distinguish foreign banks with a local presence from those without such presence. The intuition here is that a local presence may influence a foreign bank’s monitoring ability and access to information about borrowers. We observe no significant impact on the spread when there is local bank participation in a syndicated loan, nor do we find any significant influence of the presence of domestic-owned banks or foreign-owned banks on the spread. Additional estimations considering subsamples with exacerbated information asymmetries provide similar results. Therefore our conclusion is that local banks do not benefit from an advantage in monitoring ability and in information in Russia.
Introduction: In this paper we assess the effects of oil price shocks on real exchange rates and output in four major energy-producing countries: Iran, Kazakhstan, Russia, and Venezuela. Iran and Venezuela belong to the Organization of Petroleum Exporting Countries (OPEC), while Russia and Kazakhstan do not. However, they all are highly dependent on energy in their exports. For Russia, oil and oil products, together with natural gas, accounted for 60% of exports in 2007; for Kazakhstan the corresponding share was slightly over 50%. In the two OPEC countries, the share of energy in total exports is even higher, more than 80% in Iran and more than 90% in Venezuela. The price of energy is the most important determinant of the terms of trade for these countries.herefore, it is of interest to examine how the volatility of oil price affects their real exchange rates.
Author: Iikka Korhonen,Aaron Mehrotra
Source: Institute for Economies in Transition, Bank of Finland
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