Assessing China’s Corporate Sector Vulnerabilities

Released on by MissMali Chivakul
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  • Assessing China’s Corporate Sector Vulnerabilities Book Detail

  • Author : MissMali Chivakul
  • Release Date : 2015-03-30
  • Publisher : International Monetary Fund
  • Genre : Business & Economics
  • Pages : 28
  • ISBN 13 : 1484309057
  • File Size : 22,22 MB
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Assessing China’s Corporate Sector Vulnerabilities by MissMali Chivakul PDF Summary

Book Description: This paper documents and assesses the risk stemming from rising corporate indebtedness in China using a firm-level dataset of listed firms. It finds that while leverage on average is not high, there is a fat tail of highly leveraged firms accounting for a significant share of total corporate debt, mainly concentrated in the real estate and construction sector and state-owned enterprises in general. The real estate and construction firms tend to face lower borrowing costs and could withstand a modest increase of interest rate shocks despite their high leverage. The corporate sector is however vulnerable to a significant slowdown in the real estate and construction sector. Our sensitivity analysis suggests that the share of debt that would be in financial distress would rise to about a quarter of total listed firm debt in the event of a 20 percent decline in real estate and construction profits.

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Financial Distortions in China

Financial Distortions in China

File Size : 89,89 MB
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Widespread implicit guarantees and interest ceilings were major distortions in China’s financial system, contributing to a misallocation of resources. We anal