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Were the Czech Hotels Able to Confront Current Appreciation of the Czech Currency Before the End of the Exchange Rate Commitment?

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  • Tomáš Heryán

    (Department of Finance and Accounting, School of Business Administration in Karviná, Silesian University, Univerzitní nám. 1934/3, 733 40 Karviná, Czech Republic)

Abstract

This paper has focused on the issue of foreign exchange markets in relation to tourism and hotel industry in the small open economy such as the Czech Republic. After more than three years when the Czech National Bank (CNB) intervened on the foreign exchange market, everybody look forward to development of exchange rates after the end of the exchange rate commitment. The aim of this study is to show how Czech hotels were been able to confront current appreciation of the Czech koruna before the CNB had ended the exchange rate commitment. According to this aim it was necessary to investigate relations between exchange rates and turnover of Czech hotels as the first. Therefore, it has been obtained time series of the hotels' profit and loss statements from Bureau van Dijk's Amadeus international statistical database as well as exchange rates from the CNB online database. Other data is from the Eurostat and the World Bank online statistical database. As the main estimation method it is used the GMM approach with panel data for period from 2007 till 2014. After the estimation of those statistical significant relations it is essential to describe the ways, how were the hotels been able to face the exchange rate risk before the end of the commitment. Furthermore, it has been differentiated between natural hedging for smaller hotels and the usage of the financial derivatives for these bigger. Three types of hedging are described: (i) natural hedging, (ii) usage of a currency forward, and (iii) taking a loan in foreign currency.

Suggested Citation

  • Tomáš Heryán, 2017. "Were the Czech Hotels Able to Confront Current Appreciation of the Czech Currency Before the End of the Exchange Rate Commitment?," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(6), pages 1925-1933.
    • Handle: RePEc:mup:actaun:actaun_2017065061925
    DOI: 10.11118/actaun201765061925
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    References listed on IDEAS

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    1. Heryán, Tomáš & Tzeremes, Panayiotis G., 2017. "The bank lending channel of monetary policy in EU countries during the global financial crisis," Economic Modelling, Elsevier, vol. 67(C), pages 10-22.
    2. Chou, Ming Che, 2013. "Does tourism development promote economic growth in transition countries? A panel data analysis," Economic Modelling, Elsevier, vol. 33(C), pages 226-232.
    3. Akinci, Dervis Ahmet & Matousek, Roman & Radić, Nemanja & Stewart, Chris, 2013. "Monetary policy and the banking sector in Turkey," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 27(C), pages 269-285.
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