Corporate Debt, Firm Size and Financial Fragility in Emerging Markets

Laura Alfaro, Gonzalo Asis, Anusha Chari and Ugo Panizza

No 25459, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The post-Global Financial Crisis period shows a surge in corporate leverage in emerging markets and a number of countries with deteriorated corporate financial fragility indicators (Altman’s Z-score). Firm size plays a critical role in the relationship between leverage, firm fragility and exchange rate movements in emerging markets. While the relationship between firm-leverage and distress scores varies over time, the relationship between firm size and corporate vulnerability is relatively time-invariant. All else equal, large firms in emerging markets are more financially vulnerable and also systemically important. Consistent with the granular origins of aggregate fluctuations in Gabaix (2011), idiosyncratic shocks to the sales growth of large firms are positively and significantly correlated with GDP growth in our emerging markets sample. Relatedly, the negative impact of exchange rate shocks has a more acute impact on the sales growth of the more highly levered large firms.

JEL-codes: F34 G01 G15 G32 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-bec and nep-cfn
Note: CF EFG IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

Published as Laura Alfaro & Gonzalo Asis & Anusha Chari & Ugo Panizza, 2019. "Corporate debt, firm size and financial fragility in emerging markets," Journal of International Economics, .

Downloads: (external link)
http://www.nber.org/papers/w25459.pdf (application/pdf)

Related works:
Journal Article: Corporate debt, firm size and financial fragility in emerging markets (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:25459

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w25459

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().