Impacts of dollarization tendency on business financing policies: Application on Turkey

Countries around the world whose currency does not have the characteristics of international reserve money need international reserve money to continue their commercial activities with the rest of the world, to increase the effectiveness of monetary policies, to sustain growth and development. In this context, obtaining resources in foreign currency by borrowing method causes the financial sector and businesses of these countries to face the problem of dollarization. The dollarization problem that businesses are exposed to at micro level merges with the macro level and turns into the dollarization problem of the country's economy as a whole. Turkey is one of the countries which is exposed to the negativities caused by the problem of dollarization. With the widespread use of developing communication technologies in the financial field; the reflections, effects and consequences of the dollarization problem have begun to be seen and felt very quickly. However, this effect is felt with lag in the real sector compared to the financial sector. There is scarce literature which examines and measures the effects of dollarization trend especially in the manufacturing industry in Turkey. In this context, the study focuses on the dollarization trend of the manufacturing industry. The study can guide finance managers in terms of knowing how and in what direction the dollarization trend affects business financing policies and determining alternative methods that can be followed in shaping their financing policies. Within this scope, 2007-2019 quarterly data of 113 enterprises operating in the BIST manufacturing industry were analyzed in the Stata program by using econometric panel data analysis methods. According to the analysis results, liability dollarization has a statistically significant negative effect on the Total Debt / Equity ratio and the Short-term debt / Total asset ratio. The effect on continuous capital / fixed assets, Long-term debt / Total assets and Financial debt / Total assets ratio is statistically significantly and positive. Moreover, it has been shown that asset dollarization has a statistically significant negative effect on the Total debt / Total asset and Short-term debt / Total asset variables, besides of a statistically significant positive effect on the Equity / Total asset variable. When all the results are evaluated, the basic hypothesis about the effects of dollarization tendency on enterprises' financial policies is confirmed. It is in line with the theoretical framework that liability dollarization has a greater number and significance level on the dependent variables of financing policies than asset dollarization. The fact that the liability dollarization variable has significant positive effect on the continuous Capital / Fixed Assets ratio and significant negative effect on the Total debt / Total assets ratio is consistent with the theoretical expectation. However, the statistically significant positive effect of liability dollarization on the Long-term debt / Total liability ratio and the statistically significant negative effect on Short-term debt / Total liability are not consistent with the theoretical expectation. The effects of other independent variables on dependent variables emerged as secondary results of the study. In this context, it has been determined that Firm total asset size (FTAS), one of the independent variables, has a statistically significant positive effect on all dependent variables related to debt and significant negative effect on all variables related to equity. Unlike firm size, the firm market value (FMV) independent variable has a statistically significant negative effect on dependent variables related to debt and significant positive effect on equity-related dependent variables. The influence coefficient of return on assets (ROA) and return on equity (ROE) independent variables on dependent variables is low compared to other independent variables. In addition, it is concluded that, except the return on equity (ROE) independent variable, all other independent variables affect the Short-term debt / Total liability dependent variable statistically at different significance levels.