Global financial cycles and firm leverage in emerging economies: Firm and sector level heterogeneity

초록

This paper analyzes the effect of global financial cycles (GFCy) on corporate leverage in emerging market economies. Using a comprehensive firm-level panel covering 19 countries from 2000 to 2018, we document a positive association between GFCy easing and firms' leverage growth. Importantly, the effects exhibit significant heterogeneity: the sensitivity of leverage growth to the easing phase of GFCy is substantially greater for smaller firms operating in non-tradable sectors, whereas firms in tradable sectors exhibit more limited responsiveness. These findings underscore the importance of accounting for firm-and sector-level heterogeneity when assessing capital-inflow episodes and formulating macro-financial policy.

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