Fiscal Stimulus Impact on Firms' Profitability During the Global Financial Crisis

Carolina Correa-Caro, Leandro Medina (), Marcos Poplawski Ribeiro and Bennett Sutton
Authors registered in the RePEc Author Service: Marcos Poplawski-Ribeiro

No 2018/251, IMF Working Papers from International Monetary Fund

Abstract: Using financial statement data from the Thomson Reuter’s Worldscope database for 22,333 non-financial firms in 52 advanced and emerging economies, this paper examines how fiscal stimulus (i.e., changes in structural deficit) interacted with sectoral business cycle sensitivity affected corporate profitability during the recovery period of the global financial crisis (GFC). Using cross-sectional analyses, our findings indicate that corporate profitability improved significantly after the GFC fiscal stimulus, especially in manufacturing, utilities and retail sectors. Firm size and leverage are also found to be significant in explaining changes in corporate profitability.

Keywords: WP; market firm; potential GDP; firm indebtedness; government spending; total assets; Fiscal Stimulus; Global Financial Crisis; Worldscope; Firm Profitability; firm level; working capital; financial statement variable; firms' profitability; earnings before interest; taxes; depreciation; and amortization; firms sales; debt ratio; Central bank policy rate; Business cycles; Global (search for similar items in EconPapers)
Pages: 38
Date: 2018-11-28
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Citations: View citations in EconPapers (3)

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