Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses:
This paper investigates the likelihood of corporate insolvency and the potential implications of debt overhang of non-financial corporations induced by economic shock associated with the outbreak of COVID-19. Based on simple accounting models, it evaluates the extent to which firms deplete their equ...
Gespeichert in:
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| Weitere Verfasser: | , , , , |
| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Paris
OECD Publishing
2021
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| Schriftenreihe: | OECD Economics Department Working Papers
no.1651 |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Zusammenfassung: | This paper investigates the likelihood of corporate insolvency and the potential implications of debt overhang of non-financial corporations induced by economic shock associated with the outbreak of COVID-19. Based on simple accounting models, it evaluates the extent to which firms deplete their equity buffers and increase their leverage ratios in the course of the COVID-19 crisis. Next, relying on regression analysis and looking at the historical relationship between firms' leverage and investment, it examines the potential impact of higher debt levels on investment during the recovery. Against this background, the discussion outlines a number of policy options to flatten the curve of crisis-related insolvencies, which could potentially affect otherwise viable firms, and to lessen the risk of debt-overhang, which could slow down the speed of recovery. |
| Beschreibung: | 1 Online-Ressource (37 p.) |
| DOI: | 10.1787/747a8226-en |
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| spelling | Demmou, Lilas VerfasserIn aut Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses Lilas, Demmou ... [et al] Paris OECD Publishing 2021 1 Online-Ressource (37 p.) Text txt rdacontent Computermedien c rdamedia Online-Ressource cr rdacarrier OECD Economics Department Working Papers no.1651 This paper investigates the likelihood of corporate insolvency and the potential implications of debt overhang of non-financial corporations induced by economic shock associated with the outbreak of COVID-19. Based on simple accounting models, it evaluates the extent to which firms deplete their equity buffers and increase their leverage ratios in the course of the COVID-19 crisis. Next, relying on regression analysis and looking at the historical relationship between firms' leverage and investment, it examines the potential impact of higher debt levels on investment during the recovery. Against this background, the discussion outlines a number of policy options to flatten the curve of crisis-related insolvencies, which could potentially affect otherwise viable firms, and to lessen the risk of debt-overhang, which could slow down the speed of recovery. Economics Calligaris, Sara MitwirkendeR ctb Franco, Guido MitwirkendeR ctb Dlugosch, Dennis MitwirkendeR ctb Adalet McGowan, Müge MitwirkendeR ctb Sakha, Sahra MitwirkendeR ctb FWS01 ZDB-13-SOC FWS_PDA_SOC https://doi.org/10.1787/747a8226-en Volltext |
| spellingShingle | Demmou, Lilas Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses Economics |
| title | Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses |
| title_auth | Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses |
| title_exact_search | Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses |
| title_full | Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses Lilas, Demmou ... [et al] |
| title_fullStr | Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses Lilas, Demmou ... [et al] |
| title_full_unstemmed | Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses Lilas, Demmou ... [et al] |
| title_short | Insolvency and debt overhang following the COVID-19 outbreak: Assessment of risks and policy responses |
| title_sort | insolvency and debt overhang following the covid 19 outbreak assessment of risks and policy responses |
| topic | Economics |
| topic_facet | Economics |
| url | https://doi.org/10.1787/747a8226-en |
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