Summary of Corporate Debt in Emerging Economies

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After sailing through the 2008 global financial crisis, emerging market economies (EMEs) have hit some headwinds in the form of higher debt, sluggish global economies and tighter credit conditions. The Federal Reserve’s long-awaited interest rate increase could unleash a financial storm in these countries, and one channel for that instability is EME corporate debt. Economists Viral Acharya, Stephen G. Cecchetti, José De Gregorio, Şebnem Kalemli-Özcan, Philip R. Lane and Ugo Panizza investigate EMEs’ vulnerability to another crisis. getAbstract suggests this scholarly analysis, written for the economic community, to finance professionals and investors.

In this summary, you will learn

  • How tighter global credit conditions might affect emerging market economies (EMEs),
  • Why private-sector corporate debt in developing countries could funnel instability and
  • What three case studies reveal about EME corporate debt.
 

About the Authors

Viral Acharya et al. are members of the Committee on International Economic Policy and Reform, a nonpartisan group of economists who examine monetary and financial crises, offer systematic analysis and advance reform ideas.

 

Summary

The private sectors in emerging market economies (EMEs) have raised their indebtedness. Bonds issued by the financial industry totaled almost $1 trillion in 2014, compared to $400 billion in 2010, while nonfinancial corporate issuance was $400 billion, approximately twice its 2010 level. About 80% of...

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