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Journals / International Review of Economics and Management / 2026 / Cilt: 4 Sayı: 2

FOREIGN EXCHANGE RISK AND FINANCIAL PERFORMANCE: THE CASE OF TURKEY

Deniz Parlak
Hüseyin İlhan
Pages
1–15
Publication Date
2016-10-30
DOI
—
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

The performed ANOVA test indicated that companies with short foreign exchange positions were able to increase their overall profitability to the same level as companies with long foreign exchange positions in periods when local currency was overvalued, but exposed to serious losses in periods of local currency devaluation.

📌 3 Key Takeaways

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Objective & Hypothesis:The purpose of this study is to investigate the magnitude of foreign exchange open positions of manufacturing and service sector companies, to determine the effect of open positions on companies’ financial performance and to find out the factors that contribute to the firms’ tendency of keeping short foreign exchange position.
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Key Findings & Data:The analysis conducted on 30 firms for the period spanning from the third quarter of 2012 to the second quarter of 2015 showed that operating profitability of the firms with short foreign exchange position was lower than operating profitability of firms with long foreign exchange position.
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Conclusion & Impact:The performed ANOVA test indicated that companies with short foreign exchange positions were able to increase their overall profitability to the same level as companies with long foreign exchange positions in periods when local currency was overvalued, but exposed to serious losses in periods of local currency devaluation.
🔬Design:Araştırma Makalesi
📍Scope:2012 Verileri
⚙️Variables:Short FX Position · Hedging · Financial Performance

Abstract

The purpose of this study is to investigate the magnitude of foreign exchange open positions of manufacturing and service sector companies, to determine the effect of open positions on companies’ financial performance and to find out the factors that contribute to the firms’ tendency of keeping short foreign exchange position. The analysis conducted on 30 firms for the period spanning from the third quarter of 2012 to the second quarter of 2015 showed that operating profitability of the firms with short foreign exchange position was lower than operating profitability of firms with long foreign exchange position. The performed ANOVA test indicated that companies with short foreign exchange positions were able to increase their overall profitability to the same level as companies with long foreign exchange positions in periods when local currency was overvalued, but exposed to serious losses in periods of local currency devaluation. Applied regression analysis revealed that companies which had short foreign exchange position in the present period had higher liquidity and asset efficiency and lower overall profitability than companies with long foreign exchange position in the previous period.

Özet

The purpose of this study is to investigate the magnitude of foreign exchange open positions of manufacturing and service sector companies, to determine the effect of open positions on companies’ financial performance and to find out the factors that contribute to the firms’ tendency of keeping short foreign exchange position. The analysis conducted on 30 firms for the period spanning from the third quarter of 2012 to the second quarter of 2015 showed that operating profitability of the firms with short foreign exchange position was lower than operating profitability of firms with long foreign exchange position. The performed ANOVA test indicated that companies with short foreign exchange positions were able to increase their overall profitability to the same level as companies with long foreign exchange positions in periods when local currency was overvalued, but exposed to serious losses in periods of local currency devaluation. Applied regression analysis revealed that companies which had short foreign exchange position in the present period had higher liquidity and asset efficiency and lower overall profitability than companies with long foreign exchange position in the previous period.

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Cite This Article

Parlak, D., İlhan, H. (2016). FOREIGN EXCHANGE RISK AND FINANCIAL PERFORMANCE: THE CASE OF TURKEY. International Review of Economics and Management, Cilt: 4 Sayı: 2, 1–15. https://ajindex.com/articles/1499438

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