The Boom in Corporate Borrowing after the Global Financial Crisis : Different Tales from East Asia and Latin America
Firms from emerging economies increased their bond financing significantly after the 2008-09 global financial crisis. The patterns of corporate borrowing in East Asia and Latin America offer very different lessons. In East Asia, the main component...
| Main Authors: | , , |
|---|---|
| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/622691613576693850/The-Boom-in-Corporate-Borrowing-after-the-Global-Financial-Crisis-Different-Tales-from-East-Asia-and-Latin-America http://hdl.handle.net/10986/35193 |
| Summary: | Firms from emerging economies increased
their bond financing significantly after the 2008-09 global
financial crisis. The patterns of corporate borrowing in
East Asia and Latin America offer very different lessons. In
East Asia, the main component behind the overall growth in
bond financing was an expansion in domestic bond issuances,
in domestic currency, by more and smaller firms. This
expansion seems to be explained by a higher supply of funds
by domestic investors, which lowered issuance costs. In
Latin America, relatively larger firms tended to borrow from
international markets issuing foreign currency bonds. These
contrasting patterns have resulted in exposures to different
types of risks. Risks in East Asia have been more related to
the increasing debt accumulation by smaller firms, issuing
debt at shorter maturities. Latin American firms have been
more exposed to external factors and currency depreciations. |
|---|