Global Corporate Stress Tests—Impact of the COVID-19 Pandemic and Policy Responses - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Global Corporate Stress Tests—Impact of the COVID-19 Pandemic and Policy Responses write by Mr. Thierry Tressel. This book was released on 2021-08-06. Global Corporate Stress Tests—Impact of the COVID-19 Pandemic and Policy Responses available in PDF, EPUB and Kindle. Corporate sector vulnerabilities have been a central policy topic since the outset of the COVID-19 pandemic. In this paper, we analyze some 17,000 publicly listed firms in a sample of 24 countries, and assess their ability to withstand shocks induced by the pandemic to their liquidity, viability and solvency. For this purpose, we develop novel multi-factor sensitivity analysis and dynamic scenario-based stress test techniques to assess the impact of shocks on firm’s ability to service their debt, and on their liquidity and solvency positions. Applying the October 2020 WEO baseline and adverse scenarios, we find that a large share of publicly-listed firms become vulnerable as a result of the pandemic shock and additional borrowing needs to overcome cash shortfalls are large, while firm behavioral responses and policies substantially help overcome the impact of the shock in the near term. Looking forward, while interest coverage ratios tend to improve over time after the initial shock as earnings recover in line with projected macroeconomic conditions, liquidity needs remain substantial in many firms across countries and across industries, while insolvencies rise over time in specific industries. To inform policy debates, we offer an approach to a triage between viable and unviable firms, and find that the needs for liquidity support of viable firms remain important beyond 2020, and that medium-term debt restructuring needs and liquidations of firms may be substantial in the medium-term.
Corporate Sector Resilience in India in the Wake of the COVID-19 Shock
Corporate Sector Resilience in India in the Wake of the COVID-19 Shock - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Corporate Sector Resilience in India in the Wake of the COVID-19 Shock write by Lucyna Gornicka. This book was released on 2021-11-19. Corporate Sector Resilience in India in the Wake of the COVID-19 Shock available in PDF, EPUB and Kindle. To assess the resilience of India’s corporate sector against COVID-19-related shocks, we conducted a series of stress tests using firm-level corporate balance sheet data. The results reveal a differential impact across sectors, with the most severe impact on contact-intensive services, construction, and manufacturing sectors, and micro, small, and medium enterprises. On policy impact, the results highlight that temporary policy measures have been particularly effective in supporting firm liquidity, but the impact on solvency is less pronounced. On financial sector balance sheets, we found that public sector banks are more vulnerable to stress in the corporate sector, partly due to their weaker starting capital positions. When considering forward-looking multiperiod growth scenarios, we find that the overall corporate performance will depend on the speed of recovery. A slower pace of recovery could lead to persistently high levels of debt at risk, especially in some services and industrial sectors.
Corporate Liquidity and Solvency in Europe during COVID-19: The Role of Policies
Corporate Liquidity and Solvency in Europe during COVID-19: The Role of Policies - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Corporate Liquidity and Solvency in Europe during COVID-19: The Role of Policies write by Mr.Christian H Ebeke. This book was released on 2021-03-02. Corporate Liquidity and Solvency in Europe during COVID-19: The Role of Policies available in PDF, EPUB and Kindle. The spread of COVID-19, containment measures, and general uncertainty led to a sharp reduction in activity in the first half of 2020. Europe was hit particularly hard—the economic contraction in 2020 is estimated to have been among the largest in the world—with potentially severe repercussions on its nonfinancial corporations. A wave of corporate bankruptcies would generate mass unemployment, and a loss of productive capacity and firm-specific human capital. With many SMEs in Europe relying primarily on the banking sector for external finance, stress in the corporate sector could easily translate into pressures in the banking system (Aiyar et al., forthcoming).
Preparing For Pandemics: Lessons From The Global Financial Crisis And Covid-19
Preparing For Pandemics: Lessons From The Global Financial Crisis And Covid-19 - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Preparing For Pandemics: Lessons From The Global Financial Crisis And Covid-19 write by David Longworth. This book was released on 2022-06-08. Preparing For Pandemics: Lessons From The Global Financial Crisis And Covid-19 available in PDF, EPUB and Kindle. In far too many cases, recommendations of forensic reports on previous pandemics were ignored. Substantial weaknesses in the preparation by public health authorities and governments increased the health and economic costs of the COVID-19 pandemic relative to what they would have been if pre-existing recommendations had been followed and a wider set of plans had been put into place. We discuss parallels between the lack of preparation of financial system regulators prior to the global financial crisis and the lack of preparation by public health authorities and governments prior to COVID-19. These parallels relate to: required stocks (of capital or equipment), data collection and sharing, lending facilities, stress testing and war games, early warning indicators and systems, contagion from abroad, operational risks, a system-wide approach (including effects on the real economy), models incorporating the heterogeneity of individuals, and effects on less-regulated parts of the system. The recent COVID-19 crisis has demonstrated that, apart from the direct economic consequences from illness and death from the virus, the main costs have been due to the varying degrees of preventative measures taken by the public, firms, and governments that directly impacted health, as well as social, economic, and financial activity. We make recommendations for carrying out post mortems on the COVID-19 experience, planning for future pandemics, and establishing transparent and accountable governance systems. We then propose the use of regular, combined health, economic, and financial stress tests and exercises/war games in preparing for future pandemics and other major environmental shocks.
The COVID-19 Impact on Corporate Leverage and Financial Fragility
The COVID-19 Impact on Corporate Leverage and Financial Fragility - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The COVID-19 Impact on Corporate Leverage and Financial Fragility write by Sharjil M. Haque. This book was released on 2021-11-05. The COVID-19 Impact on Corporate Leverage and Financial Fragility available in PDF, EPUB and Kindle. We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.
