Franklin

Corporate Leverage, Bankruptcy, and Output Adjustment in Post-Crisis East Asia [electronic resource] Kim, Se-Jik.

Author/Creator:
Kim, Se-Jik.
Publication:
Washington, D.C. : International Monetary Fund, 1999.
Series:
IMF eLibrary
IMF Working Papers; Working Paper No. 99/143.
IMF Working Papers; Working Paper No. 99/143
Format/Description:
Government document
Book
1 online resource (29 p.)
Local subjects:
Bond.
Bonds.
Capital flows.
Capital formation.
Capital gains.
Capital goods.
Capital inflows.
Capital market.
Capital ratio.
Capital stock.
Cash flow.
Cash flows.
Cost of capital.
Currency crisis.
Current account balance.
Derivative.
Discount rate.
Equity ratio.
Equity shares.
Financial economics.
Financial market.
Financial policies.
Financial sector.
Foreign bonds.
Foreign capital.
Foreign capital flows.
Gross domestic product.
International standards.
Moral hazard.
Net present value.
Present value.
Private capital.
Private capital flows.
Securities markets.
Speculative attacks.
Stock exchanges.
Indonesia.
Korea, Republic of.
Thailand.
Summary:
Different levels of corporate leverage are used in this paper to help explain the wide range of post-crisis output adjustment across East Asia. In the model developed here, highly leveraged firms facing a cutoff of capital inflows are threatened by bankruptcy. These firms respond by eliminating investment and selling their capital goods-at a discount-to try to stay afloat. Lower investment and wasteful capital sales shrink the aggregate capital stock, trigger deflationary pressures, and contract overall output. The available data are broadly consistent with the assumptions and predictions of the model.
Notes:
Description based on print version record.
Contributor:
Kim, Se-Jik.
Stone, Mark R.
Other format:
Print Version:
ISBN:
1451856326:
9781451856323
ISSN:
1018-5941
Publisher Number:
10.5089/9781451856323.001
Access Restriction:
Restricted for use by site license.
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