Corporate Distress in East Asia : The Effect of Currency and Interest Rate Shocks

A study of the five countries most affected by the East Asian financial crisis - Indonesia, the Republic of Korea, Malaysia, the Philippines, and Thailand -- shows that more than 60 percent of firms are illiquid and 30 percent are technically insolvent. Among solvent firms, about half are at risk of insolvency unless their liquidity constraints are relieved. Worst affected is Indonesia, with 77 percent of firms illiquid and 65 percent insolvent, followed by Korea and Thailand. Extrapolations using these findings suggest that non-performing loans in the five countries could amount to 7 to 30 percent of Gross Domestic Product (GDP) and non-performing assets to more than a third of their combined GDP.

Bibliographic Details

Main Authors:	Claessens, Stijn, Djankov, Simeon, Ferri, Giovanni
Language:	English
Published:	World Bank, Washington, DC 1999-01
Subjects:	ASSETS, BALANCE SHEET, BALANCE SHEETS, BANK FOR INTERNATIONAL SETTLEMENTS, BANK LENDING, BENCHMARK, BONDS, BORROWING, CENTRAL BANK, CORPORATE DEBT, DEBT, DEBT SERVICE, DEBT TO EQUITY RATIO, DEBT TO EQUITY RATIOS, DEVALUATION, DOMESTIC DEBT, ECONOMICS, EXCHANGE RATE, EXCHANGE RATES, FINANCIAL CRISIS, FINANCIAL SECTOR, FOREIGN EXCHANGE, GDP, ILLIQUIDITY, INSOLVENCY, INSURANCE, INTEREST RATE, INTEREST RATES, LENDING RATES, LIQUIDITY, MARKET INSTRUMENTS, NONBANK FINANCIAL INSTITUTIONS, NONPERFORMING LOANS, PROFITABILITY, SOLVENCY, STOCK EXCHANGES, TREASURY BONDS, WORKING CAPITAL CURRENCY FLUCTUATION, FINANCIAL CRISES, DEBT-EQUITY RATIO, CORPORATE PERFORMANCE, CORPORATE PROFITS, GROSS DOMESTIC PRODUCT,
Online Access:	http://documents.worldbank.org/curated/en/1999/01/441523/corporate-distress-east-asia-effect-currency-interest-rate-shocks https://hdl.handle.net/10986/11500
Tags:	Add Tag No Tags, Be the first to tag this record!