Assessing China’s Corporate Sector Vulnerabilities
IMF Working Papers, March 30, 2015
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- Assessing China’s Corporate Sector Vulnerabilities
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Bibliographic details
- Authors: Mali Chivakul, Waikei R Lam
- Published: March 30, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484308783.001
Key findings
- Leverage on average is not high across listed firms.
- There is a fat tail of highly leveraged firms accounting for a significant share of total corporate debt.
- Highly leveraged firms are mainly concentrated in the real estate and construction sector and state-owned enterprises in general.
- Real estate and construction firms tend to face lower borrowing costs.
- Real estate and construction firms could withstand a modest increase of interest rate shocks despite their high leverage.
- The corporate sector is vulnerable to a significant slowdown in the real estate and construction sector.
Sensitivity analysis and scenarios
- In the event of a 20 percent decline in real estate and construction profits, the share of debt that would be in financial distress would rise to about a quarter of total listed firm debt.
Subject coverage and keywords (as labeled in the source)
- Corporate sector, Economic sectors, Financial crises, Financial institutions, Global financial crisis of 2008-2009, Loans, Manufacturing, Mining sector
- Keywords: China, construction firm, construction sector firm, Corporate sector, firm distribution, Global, Global financial crisis of 2008-2009, interest rate shock, leverage, listed firm, Loans, Manufacturing, Mining sector, nonfinancial firm, real estate, state-owned enterprise (SOE), WP
Source: Assessing China’s Corporate Sector Vulnerabilities, Mali Chivakul and Waikei Raphael Lam, IMF Working Paper No. 2015/072 (March 30, 2015).