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The impact of foreign liabilities on small firms : Firm-level evidence from the Korean crisis

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  • The impact of foreign liabilities on small firms
  • Kim, Yun Jung; Tesar, Linda; Zhang, Jing
  • National Bureau of Economic Research


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Title The impact of foreign liabilities on small firms
Similar Titles
Sub Title

Firm-level evidence from the Korean crisis

Material Type Reports
Author(English)

Kim, Yun Jung; Tesar, Linda; Zhang, Jing

Publisher

Cambridge:National Bureau of Economic Research

Date 2012-01
Series Title; No NBER Working Paper Series / 17756
Pages 47
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Economy < Economic Conditions
Industry and Technology < General
Holding National Bureau of Economic Research

Abstract

Using Korean firm-level data on publicly-listed and privately-held firms together with firm exit data, we find strong evidence of the balance-sheet effect for small firms at both the intensive and extensive margins. During the crisis, small firms with more short-term foreign debt are more likely to go bankrupt, and experience larger sales declines conditional on survival. The extensive margin accounts for a large fraction of small firms' adjustment during the crisis. Consistent with many studies in the literature, large firms with larger exposure to foreign debt paradoxically have better performance during the crisis at both the intensive and extensive margin.