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Benefits and costs of coporate debt restructuring : an estimation for Korea /
The paper offers a method to quantify benefits and costs of corporate debt restructuring, with an application to Korea. We suggest a "persistent ICR<1" criterion to capture firms that had ICR<1 for multiple consecutive years and thus will likely require restructuring. We assess the b...
| Call Number: | Libro Electrónico |
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| Main Authors: | , |
| Format: | Electronic eBook |
| Language: | Inglés |
| Published: |
[Washington, D.C.] :
International Monetary Fund,
[2016]
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| Series: | IMF working paper ;
WP/16/204. |
| Subjects: | |
| Online Access: | Texto completo |
| Summary: | The paper offers a method to quantify benefits and costs of corporate debt restructuring, with an application to Korea. We suggest a "persistent ICR<1" criterion to capture firms that had ICR<1 for multiple consecutive years and thus will likely require restructuring. We assess the benefits of debt restructuring by estimating the effects of removing a firm's debt overhang on its investment and hiring decisions. We refine the assumptions on the cost of debt restructuring based on the literature, and focus not only on creditor losses, but also on the employment impact of corporate restructuring. Benchmark results for Korea suggest 5.5-7.5 percent of GDP creditor losses and a 0.4-0.9 percent of the labor force employment impact from the debt restructuring. These are compensated by a permanent 0.4-0.9 percentage points increase in future GDP growth thanks to higher corporate investment and 0.05-0.1 percent of labor force higher hiring in the subsequent years. The key qualitative result is that corporate debt restructurings "pay off" in the medium term: their economic cost is recouped over about 10 years |
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| Item Description: | "October 2016." At head of title: International Monetary Fund, Asia and Pacific Department. |
| Physical Description: | 1 online resource (22 pages) : color illustrations |
| Bibliography: | Includes bibliographical references (pages 20-21). |
| ISBN: | 9781475545418 147554541X 147554555X 9781475545555 |
| ISSN: | 1018-5941 ; |