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Private-Sector Financial Liabilities in Advanced Economies

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  • Man-Keung Tang
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    Abstract

    Advanced economies have been experiencing diverse developments in accumulation of financial liabilities by their household and corporate sectors since around 1995. Crosscountry- industry evidence indicates that the type of the financial system and the degree of labor market flexibility matter for the economic impact of expanded borrowings. Especially in countries with a more arm''s length-based financial system and less rigid labor market, faster creation of corporate liabilities in recent years appears to have spurred growth of industries more reliant on external finance, and strengthened the development of growing industries. The findings suggest an association of recent increases in corporate borrowings with a reduction in costs of external finance and improvement in resource allocation-two supposed channels through which finance facilitates growth.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/118.

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    Length: 30
    Date of creation: 01 May 2007
    Date of revision:
    Handle: RePEc:imf:imfwpa:07/118

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    Related research

    Keywords: Economic growth; External financing; Labor markets; labor market; financial system; labor market flexibility; financial systems; financial sector; equity finance; flexible labor market; rigid labor market; financial capital; financial economics; cash flows; flexible labor markets; bond markets; financial markets; financial intermediation; bond; cash flows from operations; corporate bond markets; labor force; moral hazard; cash flow; labor market reforms; stock market; money market; currency crises; annual productivity growth; labor market rigidity; financial derivatives; labor market regulations; corporate bond; liquid markets; financial stability; financial dependence;

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