Corporate Debt, Boom-Bust Cycles, and Financial Crises / Victoria Ivashina, Ṣebnem Kalemli-Özcan, Luc Laeven, Karsten Müller.

Format:

Book

Author/Creator:

Ivashina, Victoria.

Contributor:

National Bureau of Economic Research.

Kalemli-Özcan, Ṣebnem.

Laeven, Luc.

Müller, Karsten.

Series:

Working Paper Series (National Bureau of Economic Research) no. w32225.

NBER working paper series no. w32225

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2024.

Summary:

Using a new dataset on sectoral credit exposures covering financial and non-financial sectors in 115 economies over the period 1940-2014, we document the following evidence that corporate debt plays a key role in explaining boom-bust cycles, financial crises, and slow macroeconomic recoveries: (i) corporate debt accounts for two thirds of the aggregate credit expansion before crises and three quarters of total nonperforming loans during the bust; (ii) expansions in corporate debt predict crises similarly to household debt; (iii) a measure of imbalance in credit growth flowing disproportionately to some sectors, such as construction and non-bank financial intermediation, is associated with crises; and (iv) the recovery from financial crises is slower after a boom in corporate debt, especially when backed by procyclical collateral values, due to higher nonperforming loans.

Notes:

Print version record

March 2024.