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😷 | Corona bankruptcy, cumulative 2,753 cases – Concerns about shortness of breath


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Corona bankruptcy, cumulative 2,753 cases – shortness of breath fears

 
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According to the same survey, "policy support and financial institution response to risk are expected to continue, but the slump in business performance has been prolonged, and some companies have fallen into debt overhang.
 

Tokyo Shoko Research announced on May 1 the bankruptcy status related to "new coronavirus" (as of 18:1 on May 18) ... → Continue reading

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Poor business performance

Excess debt

Excess debt(Kajosaimu,British: Debt overhang) means that companies, households, governments and other organizations are over-debt, and even though it is economically optimal to borrow more, it becomes difficult to borrow more. The state of being[1].Dead overhangAlso called[2].

Corporate excess debt

Overview

Even if an economic entity such as a company wants to invest in a new project with a positive discount value (NPV, net present value), it will not be possible to invest if the face value of the debt it already has is higher than the expected return.[1]..This is because the profit from the new project goes to the bondholders, and the stockholders are negative about the project.[1]..In addition, companies may not be able to invest in new projects without the consent of the bondholders.[1]..In this way, companies will not be able to run even positive NPV projects.[1].

2008–09 financial crisis

2008 Year of 9 MonthLehman BrothersIn the financial crisis triggered by the bankruptcy, it was justified in the United States to invest public funds in the financial sector such as banks based on the logic of the problem of excess debt.But the governments of many countries, including the United States,Preferred stockI bought.Preferred stock is similar to bonds in that it pays dividends before regular stock.in this way,(English edition)The capital investment by the United States did not have a great effect on improving the problem of excess debt in the US financial sector.

Academic research suggests that the government's purchase of common stocks and non-performing loans will improve the problem of excess debt.[3]..However, when banks are insolvent, the amount of subsidies needed to solve the problem of insolvency will be very large and will also burden preferred stock holders.[4]..Banks are less willing to lend after being bailed out by the Troubled Asset Relief Program, according to an interview with bank owners[5].

Government excess debt

Overview

The concept of excess debt can also be applied to governments, especially many governments in developing countries have this problem.[6]..This problem arises when the government has more debt than it can afford in the future.[7]..The problem of over-debt in developing countriesJubilee 2000Has also developed.

Macro-structural excess debt

Macrostructural excess debt is more likely to occur when there is a potential output gap or unemployment.A panel data analysis using 20 countries with a large ratio of external debt to GDP points out that countries with a large excess debt have a low economic growth rate.[8].

Source

  1. ^ a b c d e Myers, Stewart C. (1977) "Determinants of corporate borrowing." Journal of Financial Economics, 5 (2): 147-175.
  2. ^ Kobayashi, Keiichiro (2011)"Prolonged recession after the crisis" Why Research Institute of Economy, Trade and Industry.
  3. ^ Wilson, Linus (February 2, 2009). Debt Overhang and Bank Bailouts.SSRN.com. SSRN 1336288. 
  4. ^ Wilson, Linus (February 14, 2009). The Put Problem with Buying Toxic Assets.SSRN.com. SSRN 1343625. 
  5. ^ McIntire, Mike (January 2009, 1). “Bailout Is a Windfall to Banks, if Not to Borrowers.”. New York Times. https://www.nytimes.com/2009/01/18/business/18bank.html 2009/1/20Browse. 
  6. ^ Krugman, Paul (1988) "Financing vs. forgiving a debt overhang." Journal of Development Economics, 29 (3): 253-268.
  7. ^ "Debt Overhang.”. Investopedia ULC (August 2007). 2007/8/10Browse.
  8. ^ Hwang, Jen-Te; Chung, Chieh-Ping; Wang, Chieh-Hsuan (2010) "Debt overhang, financial sector development and economic growth." Hitotsubashi Journal of Economics, 51 (1) 13-30.

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