Spring Forward or Fall Back? The Post-Crisis Recovery of Firms
IMF Working Papers, December 12, 2012
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- Spring Forward or Fall Back? The Post-Crisis Recovery of Firms
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Bibliographic details
- Authors: Leandro Medina
- Published: December 12, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475524734.001
Overview
- Study of corporate performance in the aftermath of the global crisis using a cross-sectional analysis of 6,581 manufacturing firms in 48 developed and developing countries in 2010.
- Objective: identify factors of resilience and vulnerability affecting the speed of firms' recovery after the crisis.
Key findings
- Pre-crisis leverage and short-term debt have had negative effects on the speed of the recovery.
- Asset tangibility has had positive effects on the speed of the recovery.
- The negative effect of leverage is non-linear, being particularly strong in firms with high pre-crisis leverage.
- Effects differ between advanced and emerging market economies.
Macroeconomic framework effects
- The macroeconomic framework critically matters for firm growth.
- In countries that have allowed the exchange rate to depreciate, firms have had a faster recovery in sectors highly dependent on trade.
Data and methodology
- Sample: 6,581 manufacturing firms.
- Coverage: 48 developed and developing countries.
- Reference year: 2010.
- Analysis approach: cross-sectional analysis.
Implications and interpretation
- Balance sheet structure matters for post-crisis recovery: high leverage and reliance on short-term debt are associated with slower recoveries, while asset tangibility supports faster recoveries.
- Non-linear leverage effects imply heightened vulnerability for firms with high pre-crisis leverage.
- Country-level macroeconomic choices, such as allowing exchange rate depreciation, can influence recovery speeds for trade-dependent sectors.
- Heterogeneity across advanced and emerging market economies indicates policy and firm-level responses should consider country context.