Corporate Debt in Emerging Economies: A Threat to Financial Stability?
During 1999-2007, the international balance sheets of emerging economies grew stronger through a combination of current account surpluses, a shift from debt to equity funding, and the stockpiling of liquid foreign reserves. This risk-mitigating strategy improved their international financial standing and helped them to adjust to the global economic crisis. This report by the
Center for International Governance Innovation focuses on the financial risks associated with the increase in corporate debt in emerging economies. It identifies new risks to financial stability, especially in situations in which corporates acting as financial speculators, and/or domestic banks, fail to understand the underlying domestic and international exposures of the corporate sector.
https://www.cigionline.org/sites/default/files/ciepr2015toweb.pdf
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