IMF paper shows US monetary conditions impact EM leverage
Impact is more pronounced for firms dependent on external financing, authors find
Authors exploring whether more accommodative global financial conditions are associated with higher emerging market corporate leverage growth have found "compelling evidence" to support their hypothesis, a working paper published by the International Monetary Fund shows.
Adrian Alter and Selim Elekdag find global financial conditions influence domestic interest rates and thus corporate borrowing constraints, affecting emerging market firms' leverage growth. They derive their results from a data
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