Hedging Currency Risks? An Evaluation of SMEs in Northern Germany

  • Jan Christoph Neumann Mendel University Brno

Abstract

One of the important issues for companies is liquidity from domestic and foreign trade. The market is classically defined by the number of available markets. Globalization and free trade zones set up the foreign market, which becomes increasingly important – even for SMEs. This paper analyzed approx. 60,000 bank transactions with foreign reference north German SMEs by using Chi-square test and correlation analysis. The analysis proofs that an increasing number of foreign transfers, increases the number of foreign currency accounts per company. The results also show that despite the existence of currency hedging tools, a significant proportion continues to expose themselves to currency risk. The willingness to manage currency risks increases with the increase in value per transaction. Transactions with a value >10,000 EUR are often transferred abroad in EUR instead of in foreign currency.

Published
2019-12-23
Section
Articles