Determinants and Effects of Countries’ External Capital Structure: A Firm-Level Analysis

Author/Editor:

Uroš Herman ; Tobias Krahnke

Publication Date:

February 18, 2022

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

In this paper, we investigate whether a firm’s composition of foreign liabilities matters for their resilience during economic turmoil and examine which characteristics determine a firm’s foreign capital structure. Using firm-level data, we corroborate previous findings from the (international) macroeconomic literature that the composition of foreign liabilities matters for a country’s susceptibility to external shocks. We find that firms with a positive equity share in their foreign liabilities were less affected by the global financial crisis and also less likely to default in the aftermath of the crisis. In addition, we show that larger, more open, and more productive firms tend to have a higher equity share in total foreign liabilities.

Series:

Working Paper No. 2022/038

Subject:

Frequency:

regular

English

Publication Date:

February 18, 2022

ISBN/ISSN:

9798400200984/1018-5941

Stock No:

WPIEA2022038

Pages:

40

Please address any questions about this title to publications@imf.org