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Spillover from the Global Financial Cycle to Emerging Market Non-Financial Corporations: The Benefits and Risks of Cross-Border Flows to Philippine Conglomerates (Preliminary Findings)


This study explores how the United States (US)’ monetary policy affects the Philippines’ non-financial corporations (NFCs) through exchange rate movements. Using dynamic panel-data estimation and the data of 24 listed NFCs from 2002–2021, the research analyzes the impacts of US monetary policy and currency fluctuations on foreign borrowing and the profitability of NFCs in emerging markets. The findings reveal that when the US lowers its federal funds rate and the Philippine peso strengthens, NFCs tend to borrow more from foreign sources, leading to improved net worth due to effective investments. However, increased foreign currency borrowing also exposes them to greater credit and exchange rate risks. The study underscores the necessity for strong financial oversight and macroprudential policies to mitigate these risks. It also calls for collaboration among central banks, financial regulators, and fiscal authorities to navigate the challenges of financial globalization while ensuring price and financial stability.


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