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Corporate Financial Structure and Financial Stability

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  • Mark R. Stone
  • E. P. Davis

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.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/124.

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Length: 49
Date of creation: 01 Jul 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/124

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Keywords: Emerging markets; Financial stability; Gross domestic product; currency crises; bond; currency crisis; corporate sector; financial structure; banking crises; financial crises; bond issuance; banking crisis; financial systems; bonds; crisis episodes; money market; financial crisis; domestic money market; bond financing; financial markets; money market rate; bond issues; financial instability; equity share; stock markets; recessions; money market interest rate; money market interest; bond markets; systemic financial crises; financial sector; stock market; financial liberalization; financial fragility; financial sector development; outstanding bonds; cash flow; crisis problem; financial system; term bonds; discount rate; equity markets; global bond; bank crises; systemic financial crisis; systemic risk; asian crisis; cross-country experience; economic crisis; financial assets; asset markets; financial dependence; financial services; liquid asset; bond market; financial globalization; bank runs; long-term bonds; financial institutions; lower discount rate; recession; post-crisis investment; pre-crisis; moral hazard; financial distress; early warning system; legal systems; government bond; capital mobility; liquidity crises; government bond market; crisis prevention; bank crisis; financial structures; stock market liquidity;

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References

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