|Host Name||:The SEACEN Centre|
|Date From||:11 May 2021|
|Date To||:11 May 2021|
With business leverage at record levels, the effects of corporate debt overhang on growth and investment have become a prominent concern. In this paper, we study the effects of corporate debt overhang based on long-run cross-country data covering the near- universe of modern business cycles. We show that business credit booms typically do not leave a lasting imprint on the macroeconomy. Quantile local projections indicate that business credit booms do not affect the economy’s tail risks either. Yet in line with theory, we find that the economic costs of corporate debt booms rise when inefficient debt restructuring and liquidation impede the resolution of corporate financial distress and make it more likely that corporate zombies creep.
Click tabs to swap between content that is broken into logical sections.
Copyright © 2018 | All Rights Reserved - The SEACEN Centre Web Design by Justsimple