Transmission Mechanism of Exchange Rate Fluctuations on Financing of Iranian Economic Enterprises

Exchange rate and its fluctuations are among the effective indicators of decision making about investment, choice of financing in enterprises as well as assessing the improvement of the business environment at each economy level. Exchange rate volatility can lead to increase of risk and uncertainty in financial markets and disturbance of the business environment. The balance sheet effect of exchange rate fluctuations affects the level of asset and debt of enterprises leading to increase of the cost of debt financed by foreign sources.; The study covers both the theoretical and the empirical aspects evaluating the interaction between capital market indicators, and foreign exchange rate. The analysis uses monthly data for a period of 1385:01 to 1393:06.; The results show that fluctuations of exchange rate in parallel market have had negative effect on financing from Tehran Stock Exchange Market. The effects of exchange rate shocks on such financing last at least for ten months.;