Corporate Financial Structure and Financial Stability

Mark Stone and E Davis ()

No 2004/124, IMF Working Papers from International Monetary Fund

Abstract: This paper uses flow-of-funds and balance sheet data to analyze the impact of financial crises on corporate financing and GDP in a range of countries. Post-crisis GDP contractions are mainly accounted for by declines in investment and inventory and are more severe for emerging market countries. Post-crisis investment and inventory declines are correlated with the corporate debtequity ratio. Although companies in emerging market countries hold more liquidity, this is not sufficient to prevent a greater response of expenditures to shocks. Industrial countries appear to benefit from an offsetting increase in bond issuance.

Keywords: WP; banking crisis; changes range; currency crisis; OECD country; bank lending; crisis effect; external finance; trade credit; Corporate finance; financial instability; emerging market country; output changes range; real gross domestic product; bank crisis dynamics; GDP contraction; GDP flows data; currency crisis dummy; ratio rise; emerging market result; flows data; Emerging and frontier financial markets; Banking crises; Currency crises; Bank credit; Africa (search for similar items in EconPapers)
Pages: 49
Date: 2004-07-01
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Citations: View citations in EconPapers (54)

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Journal Article: Corporate financial structure and financial stability (2004)
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