Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • May 2019
  • Article
  • Journal of International Economics

Corporate Debt, Firm Size and Financial Fragility in Emerging Markets

By: Laura Alfaro, Gonzalo Asis, Anusha Chari and Ugo Panizza
  • Format:Print
ShareBar

Abstract

The post-Global Financial Crisis period shows a surge in corporate leverage in emerging markets and a number of countries with deteriorated corporate financial fragility indicators (Altman’s Z-score). Firm size plays a critical role in the relationship between leverage, firm fragility, and exchange rate movements in emerging markets. While the relationship between firm leverage and distress scores varies over time, the relationship between firm size and corporate vulnerability is relatively time invariant. All else being equal, large firms in emerging markets are more financially vulnerable and also systemically important. Consistent with the granular origins of aggregate fluctuations in Gabaix (2011), idiosyncratic shocks to the sales growth of large firms are positively and significantly correlated with GDP growth in our emerging markets sample. Relatedly, the negative impact of exchange rate shocks has a more acute impact on the sales growth of the more highly levered large firms.

Keywords

Corporate Debt; Firm Size; Financial Fragility; Emerging Market; Organizations; Borrowing and Debt; Financial Condition; Emerging Markets; System Shocks

Citation

Alfaro, Laura, Gonzalo Asis, Anusha Chari, and Ugo Panizza. "Corporate Debt, Firm Size and Financial Fragility in Emerging Markets." Journal of International Economics 118 (May 2019): 1–19. (Also NBER Working Paper 25459.)
  • Find it at Harvard
  • Read Now

About The Author

Laura Alfaro

General Management
→More Publications

More from the Authors

    • February 2023
    • Faculty Research

    Doing Business in Boston, Massachusetts

    By: Laura Alfaro, Leonard A. Schlesinger and Zeke Gillman
    • September 2022
    • Management Science

    Health Externalities and Policy: The Role of Social Preferences

    By: Laura Alfaro, Ester Faia, Nora Lamersdorf and Farzad Saidi
    • July 2022
    • Faculty Research

    FIELD Immersion 2022: Lawrence, Massachusetts

    By: Laura Alfaro and Tom Quinn
More from the Authors
  • Doing Business in Boston, Massachusetts By: Laura Alfaro, Leonard A. Schlesinger and Zeke Gillman
  • Health Externalities and Policy: The Role of Social Preferences By: Laura Alfaro, Ester Faia, Nora Lamersdorf and Farzad Saidi
  • FIELD Immersion 2022: Lawrence, Massachusetts By: Laura Alfaro and Tom Quinn
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College