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Corporate financial structure and financial stability

  • Davis, E. Philip
  • Stone, Mark R.

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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Article provided by Elsevier in its journal Journal of Financial Stability.

Volume (Year): 1 (2004)
Issue (Month): 1 (September)
Pages: 65-91

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Handle: RePEc:eee:finsta:v:1:y:2004:i:1:p:65-91
Contact details of provider: Web page: http://www.elsevier.com/locate/jfstabil

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