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The Impact of Foreign Liabilities on Small Firms: Firm-Level Evidence from the Korean Crisis

Yun Jung Kim (), Linda Tesar () and Jing Zhang ()

No 620, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: Using Korean firm-level data on publicly-listed and privately-held firms together with firm exit data, we find strong evidence of the balance-sheet effect for small firms at both the intensive and extensive margins. During the crisis, small firms with more short-term foreign debt are more likely to go bankrupt, and experience larger sales declines conditional on survival. The extensive margin accounts for a large fraction of small firmsÕ adjustment during the crisis. Consistent with many studies in the literature, large firms with larger exposure to foreign debt paradoxically have better performance during the crisis at both the intensive and extensive margin.

Keywords: financial crisis; firm-level data; balance-sheet effects; Korean economy (search for similar items in EconPapers)
JEL-codes: E44 F32 F34 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2011-12
New Economics Papers: this item is included in nep-ifn and nep-sbm
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Downloads: (external link)
http://www.fordschool.umich.edu/rsie/workingpapers/Papers601-625/r620.pdf

Related works:
Journal Article: The impact of foreign liabilities on small firms: Firm-level evidence from the Korean crisis (2015) Downloads
Working Paper: The Impact of Foreign Liabilities on Small Firms: Firm-Level Evidence from the Korean Crisis (2012) Downloads
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