Non-Financial Corporate Debt in Advanced Economies, 2010–17
IMF Working Papers, July 3, 2020
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- Non-Financial Corporate Debt in Advanced Economies, 2010–17
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Bibliographic details
- Authors: Luiza Antoun de Almeida, Thierry Tressel
- Published: July 3, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513549200.001
Scope and data
- Study period: 2010–2017.
- Sample: some 5,000 publicly listed non-financial firms in major advanced economies.
- Focus: evolution of leverage, debt maturity, composition of corporate debt (bond markets versus other debt), and firm cash holdings.
- Note: data extend through 2017 and do not reflect developments during the coronavirus pandemic.
Key findings on corporate debt trends
- Since 2010, firms have increased reliance on corporate bond markets.
- Firms have used part of their debt to increase their holdings of cash.
- Substantial differences exist across countries, industries, firms, and years in:
- leverage
- debt maturity
- Time factors common to firms were identified as drivers of capital structures.
Macro-financial drivers and cross-country patterns
- Within countries, loosening an index of financial conditions is associated with lengthening debt maturity after controlling for firm characteristics.
- Across firms and countries:
- Leveraging and lengthening debt maturity have been greater where economic growth was stronger.
- Tighter financial conditions are positively associated with an increase in short-term debt financing.
Heterogeneity: quantile regression results
- Quantile regressions indicate substantial heterogeneity across firms in responses to macro-financial conditions:
- Large increases in long-term debt financing and large declines in short-term debt financing tend to be driven more by better macroeconomic performance.
- Large increases in short-term debt financing are more strongly impacted by tighter financial conditions.
Risk assessment and sensitivity analysis
- Sensitivity analysis indicates a significant amount of corporate debt could be at risk in some countries:
- Amount at risk represents more than 5 percent of GDP in some countries.
- If financial conditions tighten or economic growth slows down, there could be an adverse spillover to the financial system.
Policy implications and recommendations
- Vulnerabilities in corporate debt should be closely monitored.
- Policy action should be taken if warranted to mitigate risks from:
- tightening financial conditions
- slowing economic growth
- concentration of short-term financing increases under stress
IMF Working Paper by Luiza Antoun de Almeida and Thierry Tressel (July 3, 2020).
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