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Corporate Financial Structure and Financial Stability

  • Mark R. Stone
  • E. P. Davis

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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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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