Format:
1 Online-Ressource (circa 48 Seiten)
,
Illustrationen
ISBN:
9781498311502
Series Statement:
IMF working paper WP/19, 93
Content:
Using a new firm-level dataset with comprehensive information on Asian firms' FX liabilities, we show that Asia's nonfinancial corporate sector is vulnerable to a tightening of global financial conditions. Higher global interest rates and exchange rate depreciation increase the probability of default of Asian firms. A 30 percent currency depreciation is associated with a two-notch downgrade in the corporate credit rating (e.g., from A to BBB+), resulting in 7 percent of Asian firms falling into bankruptcy. But the impact is nonlinear-as the firms' FX liability increases, the balance sheet channel of exchange rate offsets, then dominates, the competitiveness channel. The balance sheet channel offsets the competitiveness channel when the share of U.S. dollar debt is between 10 and 20 percent. We also find that currency depreciation increases firm-level investment on average, but for firms with the share of FX liabilities above 20 percent, investment contracts with depreciation
Additional Edition:
Erscheint auch als Druck-Ausgabe Jiang, Bo The Turning Tide: How Vulnerable are Asian Corporates? Washington, D.C. : International Monetary Fund, 2019 ISBN 9781498311502
Language:
English
Keywords:
Graue Literatur
DOI:
10.5089/9781498311502.001
URL:
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