Currency Mismatch and Systemic Risk in Emerging Europe
type: Dataset
description: We analyze the dual role of currency mismatch: as a vehicle that exposes the economy to systemic risk, but also as an engine of growth. We do so at the macro and the micro levels for emerging European economies in recent years. At the aggregate level, we construct a new index of currency mismatch in the banking sector that controls for lending made by banks to unhedged borrowers--i.e., those with no foreign currency income. Using our index, we find that across emerging European economies, increases in currency mismatch are associated with higher growth in tranquil times, but with a greater severity of crisis. These results are also confirmed for a broader sample of emerging economies. On net, after taking into account the crisis period, we find a positive link between currency mismatch and growth. In our firm-level analysis, we find that currency mismatch helps relax borrowing constraints and enhances firms' growth in emerging Europe. These effects are stronger across sets of financially constrained firms--those that are small and are in nontradables sectors.
issued: 2026-05-05T19:53:41.149075
language: en
modified: 2026-05-05T19:53:41.149079
contact point: Organization
  fn: CCSD
keyword: currency-mismatch
keyword: emerging-economies
keyword: financial-crises
keyword: infoeu-reposemanticspreprint
keyword: jel-e---macroeconomics-and-monetary-economicsee4---money-and-interest-ratesee4e44---financial
keyword: lending-booms
keyword: preprints-working-papers-
keyword: shsecohumanities-and-social-scienceseconomics-and-finance
keyword: systemic-risk
landing page: https://shs.hal.science/halshs-00967419

Currency Mismatch and Systemic Risk in Emerging Europe
type: Distribution
format: HTML
issued: 2026-05-05T19:53:41.203468
modified: 2026-05-05T19:53:41.134083
access URL: https://shs.hal.science/halshs-00967419

test_moissonnage_selune
type: Agent