Fiscal Stimulus Impact on Firms' Profitability During the Global Financial Crisis

IMF Working Papers, November 28, 2018

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Fiscal Stimulus Impact on Firms' Profitability During the Global Financial Crisis

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Bibliographic details

• Authors: Carolina Correa-Caro, Leandro Medina, Marcos Poplawski Ribeiro, Bennett W Sutton
• Published: November 28, 2018
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484380659.001

Study scope and data

• Authors: Carolina Correa-Caro, Leandro Medina, Marcos Poplawski Ribeiro, Bennett W Sutton
• Publication date: November 28, 2018
• Sample: financial statement data from the Thomson Reuter’s Worldscope database for 22,333 non-financial firms in 52 advanced and emerging economies
• Publication details:
  • Pages: 38
  • Volume: 2018
  • Issue: 251
  • Series: Working Paper No. 2018/251
  • DOI: https://doi.org/10.5089/9781484380659.001
  • Stock No: WPIEA2018251
  • ISBN: 9781484380659
  • ISSN: 1018-5941

Research question and methodology

• Objective: Examine how fiscal stimulus (i.e., changes in structural deficit) interacted with sectoral business cycle sensitivity to affect corporate profitability during the recovery period of the global financial crisis (GFC).
• Approach: Cross-sectional analyses using firm-level financial statement variables from Worldscope.

Key findings

• Corporate profitability improved significantly after the GFC fiscal stimulus.
• Sectoral impact:
  • Notable improvements in profitability in:
  • manufacturing
  • utilities
  • retail
• Firm characteristics associated with changes in profitability:
  • Firm size is significant in explaining changes in corporate profitability.
  • Leverage is significant in explaining changes in corporate profitability.

Subject coverage and keywords

• Subjects: Business cycles, Central bank policy rate, Economic growth, Expenditure, Financial services, Fiscal policy, Fiscal stimulus
• Keywords (as provided): and amortization, Business cycles, Central bank policy rate, debt ratio, depreciation, earnings before interest, financial statement variable, firm indebtedness, firm level, Firm Profitability, firms sales, firms' profitability, Fiscal Stimulus, Global, Global Financial Crisis, government spending, market firm, potential GDP, taxes, total assets, working capital, Worldscope, WP

IMF Working Papers — Fiscal Stimulus Impact on Firms' Profitability During the Global Financial Crisis (Working Paper No. 2018/251).

Content in this bundle

• 3. Fiscal Impulse, 2009
  • 3. Fiscal Impulse, 2009 (Markdown version)
  • 3. Fiscal Impulse, 2009 (PDF)