Journal of Financial Stability Vol. 1 No. 1 2004
Corporate financial structure and financial stability
Abstract
Drawing on a unique dataset of flow-of funds and balance sheet data, this paper analyzes the impact of financial crises on aggregate corporate financing and expenditure in a range of countries. Investment and inventory contractions are the main contributors to lower GDP growth after crises, with a much greater effect in emerging market countries. The debt–equity ratio is correlated with investment and inventory declines following crises. Econometric analysis suggests that financial crises have a greater impact on expenditure and the financing of corporate sectors in emerging markets than in industrial countries. Industrial countries appear to benefit from a pick-up in bond issuance in the wake of banking crises. Although companies in emerging market countries hold more precautionary liquidity, this is evidently not sufficient to prevent a greater amplitude of response of expenditure to shocks.
- DOI
- 10.1016/j.jfs.2004.06.003
- Volume
- 1
- Issue
- 1
- Pages
- 65-91
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref