Growth of Global Corporate Debt : Main Facts and Policy Challenges
This paper surveys the literature to document the main stylized facts, risks, and policy challenges related to the expansion of global nonfinancial corporate debt after the 2008–09 global financial crisis. Nonfinancial corporate debt steadily incre...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/570381599749598347/Growth-of-Global-Corporate-Debt-Main-Facts-and-Policy-Challenges http://hdl.handle.net/10986/34480 |
| Summary: | This paper surveys the literature to
document the main stylized facts, risks, and policy
challenges related to the expansion of global nonfinancial
corporate debt after the 2008–09 global financial crisis.
Nonfinancial corporate debt steadily increased after the
crisis, especially in emerging economies. Between 2008 and
2018, corporate debt increased from 56 to 96 percent of
gross domestic product in emerging economies, whereas this
ratio remained stable in developed economies. Nonfinancial
corporate debt was mainly issued through bond markets, and
its growth can be largely attributed to accommodative
monetary policies in developed economies. Whereas increased
debt financing has some positive aspects, it has also
amplified firms' solvency risks and exposure to changes
in market conditions, such as the economic downturn
triggered by the COVID-19 pandemic. Because capital markets
have a larger role in firm financing, policy makers have
limited tools to mitigate the risks of growing firm debt. |
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