An Investigation the Effect of Exchange Rate Volatility and Macroeconomic Variables on the Financing Cost of Companies Listed in the Tehran Stock Exchange

In this study, the impacts of exchange rate volatility in terms of other economic variables on the financing cost of companies listed on the Tehran Stock Exchange have been evaluated using the panel data method during the period 2008-2018. Based on the theoretical literature presented in this study, the financing cost of the surveyed companies is a function of exchange rate volatility, interest rate, inflation rate, the growth rate of the total market price index, and economic growth rate. The results Show, except for the variable of the inflation rate, the coefficients of the variables are statistically significant, and their signs are consistent with the theoretical expectations. Furthermore, the coefficient of exchange rate volatility in the model of the financing cost investigated in the study is positive. That is to say, the variable has a direct effect on financing costs. An increase in exchange rate volatility results in a rise in the financing cost of the companies under review and decreases investment in the companies under study. Theoretically, there are two different approaches to the effect of inflation on the cost of financing. On the one hand, rising inflation due to creating uncertainty in the capital market will reduce capital attraction and increase the cost of financing. On the other hand, a steady rise in prices leads to an increase in accumulated profits. According to the theoretical literature and the results obtained in this study, the negative and positive effects of inflation on the financing of the companies under study neutralize and ineffective each other, because the coefficient of variable inflation in the estimated model, in terms of It is statistically meaningless.