The Impact of Foreign Liabilities on Small Firms: Firm-Level Evidence from the Korean Crisis
AbstractUsing 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.
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Bibliographic InfoPaper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 620.
Length: 47 pages
Date of creation: Dec 2011
Date of revision:
financial crisis; firm-level data; balance-sheet effects; Korean economy;
Other versions of this item:
- Yun Jung Kim & Linda Tesar & Jing Zhang, 2012. "The Impact of Foreign Liabilities on Small Firms: Firm-Level Evidence from the Korean Crisis," NBER Working Papers 17756, National Bureau of Economic Research, Inc.
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
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