Growth of Global Corporate Debt : Main Facts and Policy Challenges

Abraham, Facundo; Cortina, Juan J.; Schmukler, Sergio L.

doi:10.1596/1813-9450-9394

Cited by 10 publications

(11 citation statements)

References 22 publications

(26 reference statements)

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“…However, if the government is involved in corporate debt restructuring, this interventions can have effects on public finances. Since the existing literature provides only a partial view of corporate debt as it usually focuses on specific markets and borrowers, it seems that is needed a more detail analysis on the levels and composition of corporate debt across economies [1].…”

Section: The Effects Of the Covid-19 Crisis On The Indebtedness Of Th...mentioning

confidence: 99%

Comparative analysis of the economic policy response to COVID-19 in the EU-27 and Republic of Serbia

Nikolić¹,

Filipović²

2021

Ekonomika preduzeća

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In response to the COVID-19 crisis, a wide range of short-term fiscal, monetary and macroprudential measures have been implemented. The aim of this research is to compare the effects of the package of economic measures implemented in the EU-27 countries and the Republic of Serbia in 2020 according to several criteria, starting from factors which had the impact on the amount of economic aid package to assessing short-term effects on economic activity, labour market and public debt. The results of the research showed that the financial value of the economic aid package in 2020 reflects, above all, the economic capacity and relative wealth of the country, rather than the depth of the crisis that the countries faced. A positive interdependence was found between the financial amount of the economic measures package and the amount of public debt as a percentage of GDP, while a negative interdependence was found between the change in unemployment rate and the volume of economic package aid as a share of GDP. Based on the available data, it is still not possible to determine the positive statistical impact of the economic package aid on economic growth. Such findings are also expected because the measures were primarily tailored to preserve the liquidity of the economy and employment. Besides, a certain period of time is needed for the measures to take effect, which may explain the discrepancy between the amount of aid and the depth of economic activity in 2020. The data showed that the Serbian economy, unlike the Eurozone, recorded moderate debt growth and adequate capitalized banking sector is resistant to credit risk growth.

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Section: The Effects Of the Covid-19 Crisis On The Indebtedness Of Th...mentioning

confidence: 99%

Comparative analysis of the economic policy response to COVID-19 in the EU-27 and Republic of Serbia

Nikolić¹,

Filipović²

2021

Ekonomika preduzeća

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show abstract

“…According to the authors of the report, corporate and public finances are overloaded with accumulated debts, resulting in mass bankruptcies, deteriorating payment discipline, crises of liquidity and public finances (including sovereign debt). The World Bank estimates that total debt, including corporate and sovereign (public) debt, rose to 318% of world GDP in 2018 from 292% in 2008 [5], and reached 360% of world GDP in 2021 [6].…”

Section: Introductionmentioning

confidence: 99%

Transfer Pricing Documentation: Globalization and Regional Optimization

Svitlana¹,

Nykyforuk²,

Pelekh³

et al. 2022

ujaf

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“…Moreover, limitations related to the amounts obtained through equity financing may appear, particularly when the company is on an aggressive growth trend. Increased debt financing also has advantages, as it reduces the overall tax burden through tax-deductible interest, but in times of economic downturn, it amplifies firms' solvency risks and exposure to changes in market conditions (Abraham et al 2020).…”

Section: Introductionmentioning

confidence: 99%

“…The Global Financial Crisis of 2007-2009 brought with it a substantial increase in global debt, from 292% of the global gross domestic product (GDP) in 2008 to 318% in 2018. The non-financial sector was the main contributor to this rise, along with government debt-their ratios to the global GDP rose from 78 to 92% and from 62 to 86%, respectively, representing an increase of approximately EUR 23 trillion (Lund 2018;Abraham et al 2020). In the European Union (EU), the total debt of non-financial corporations in the (current) 27 member countries was also on the rise, growing from 97.7% of EU's GDP in 2009 to 99.8% in 2019, according to the European Commission and Eurostat.…”

Section: Introductionmentioning

confidence: 99%

Solvency Risk and Corporate Performance: A Case Study on European Retailers

Horobeț

Curea

Popoviciu

et al. 2021

JRFM

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This paper proposes a new approach toward understanding the financial performance dynamics in the EU retail sector (pre-pandemic); we focus on the connection between indebtedness and solvency risk and other areas of corporate performance (e.g., liquidity, assets efficiency, and profitability). Its contribution resides in identifying the drivers behind solvency risk in a sector that went through significant transformations in recent decades, as well as the links between the various areas of performance of retailers, and their impacts on solvency risk, using the machine-learning random forest methodology. The results indicate a declining trend for solvency risk of EU food retailers after the global financial crisis and up until the beginning of the pandemic, which may reflect their maturity on the market, but also an adjustment to legal changes in the EU, meant to equalize the tax advantages of debt versus equity financing. Solvency risk accompanied by liquidity risk is a mark of the retail sector, and our results indicate that the most critical trade that EU retailers face is between solvency risk and liquidity, but is fading over time. The volatility of liquidity levels is an important predictor of solvency risk; hence, sustaining a stable and good level of liquidity supports lower risks of financial distress, and may mitigate the shock impacts for EU retailers. A higher solvency risk was accompanied by increased efficiency of asset use, but reduced profitability levels, which led to higher returns available to shareholders for high solvency risk retailers. Overall, retailers should focus on operational performance evidenced by financial indicator levels than on the volatility of these indicators as predictors of solvency risk.

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Growth of Global Corporate Debt : Main Facts and Policy Challenges

Cited by 10 publications

References 22 publications

Comparative analysis of the economic policy response to COVID-19 in the EU-27 and Republic of Serbia

Comparative analysis of the economic policy response to COVID-19 in the EU-27 and Republic of Serbia

Transfer Pricing Documentation: Globalization and Regional Optimization

Solvency Risk and Corporate Performance: A Case Study on European Retailers

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