Assessing China's Corporate Sector Vulnerabilities:

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, m...

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Bibliographic Details
Main Author: Chivakul, Mali (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2015
Series:IMF Working Papers Working Paper No. 15/72
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Summary: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
Physical Description:1 Online-Ressource (28 p)
ISBN:1484308786
9781484308783

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