SALISBURY, MD---When seeking loans in foreign currency, multinational corporations will face the effective rate. The actual cost of loans by the lender depends not only on the interest rate charged by the bank, but on the movement in the value of the borrowed currency, as well. Thus, the actual or “effective” rate becomes the bottom line for repayment.
Dr. Kashi Khazeh, professor of finance in Salisbury University’s Franklin P. Perdue School of Business, recently expanded his research, since the inception of Euro, to observe the impact of currency exchange fluctuations on international loan repayments. He published his findings with recent SU M.B.A. alums (Mathias Heinecke and Christian Landau of Berlin, Germany) earlier this academic year in the Journal of Business and Behavioral Sciences.
Khazeh, with Heinecke and Landau, also presented the findings of this project, “How Effective are the Effective Rates: A Long Term View of Short Term Asset and Liability Management (Post-Euro Empirical Findings,” last summer during the ninth International Conference of the American Society of Business and Behavioral Sciences, which was held at the London School of Economics.
“The purpose of the research is to stay current in our field and test the theories and hypotheses that are in the textbooks,” Khazeh said. Allowing students to participate in such studies gives them the opportunity to use real data to determine if theories match market realities, he said. Khazeh has involved students in this type of research for the past 12 years, crediting them in publications and presentations.
This research also may help students in future endeavors. For example, Landau, who recently started pursuing his Ph.D., may have a leg up on other doctoral students, thanks to his publication in a refereed journal, Khazeh said.
National guidebooks have lauded SU for its student research opportunities, including the ones Khazeh provides. This year the campus presents its seventh annual Student Research Conference 1-7:30 p.m. Friday, April 27. The public is invited.
In 2008 SU hosts the National Conference on Undergraduate Research (NCUR).
For more information call 410-543-6030 or visit the SU Web site at www.salisbury.edu.