Have a personal or library account? Click to login
Sensitivity of Emerging Market Corporate Borrowing Spreads to Global Financial Conditions Cover

Sensitivity of Emerging Market Corporate Borrowing Spreads to Global Financial Conditions

Open Access
|Sep 2025

References

  1. Ahmed, S., Akinci, O., and Queralto, A. (2021). US monetary policy spillovers to emerging markets: both shocks and vulnerabilities matter. FRB of New York Staff Report 2021. https://doi.org/10.17016/ifdp.2021.1321
  2. Akinci, Ö. (2013). Global financial conditions, country spreads and macroeconomic fluctuations in emerging countries. Journal of International Economics 91, 358–371. https://doi.org/10.1016/j.jinteco.2013.07.005
  3. Alter, A. and Elekdag, S. (2020). Emerging market corporate leverage and global financial conditions. Journal of Corporate Finance 62, 101590. https://doi.org/10.1016/j.jcorpfin.2020.101590
  4. Anderson, G. and Cesa-Bianchi, A. (2020). Crossing the Credit Channel. IMF Working Papers 20. https://doi.org/10.5089/9781513563336.001
  5. Arellano, M. and Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies 58, 277–297.
  6. Avdjiev, S., Bruno, V., Koch, C., and Shin, H.S. (2019). The dollar exchange rate as a global risk factor: evidence from investment. IMF Economic Review 67, 151–173.
  7. Aysun, U., Jeon, K. and Kabukcuoglu, Z. (2018). Is the credit channel alive? Firm-level evidence on the sensitivity of borrowing spreads to monetary policy. Economic Modelling 75, 305–319. https://doi.org/10.1016/j.econmod.2018.07.004
  8. Banerjee, R., Hofmann, B., and Mehrotra, A. (2022). Corporate investment and the exchange rate: The financial channel. International Finance 25, 296–312.
  9. Banerjee, S. and Mohanty, M.S. (2021). US monetary policy and the financial channel of the exchange rate: Evidence from India. Bank for International Settlements, Monetary and Economic Department.
  10. Banti, C. and Bose, U. (2021). Shifts in global credit and corporate access to finance. Journal of Financial Stability 100853. https://doi.org/10.1016/j.jfs.2021.100853
  11. Bernoth, K., and Herwartz, H.(2021). Exchange rates, foreign currency exposure and sovereign risk. Journal of International Money and Finance 117, 102454.
  12. Blundell, R. and Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics 87, 115–143.
  13. Bond, S.R. (2002). Dynamic panel data models: a guide to micro data methods and practice. Portuguese economic journal 1, 141–162.
  14. Bose, U., Filomeni, S., and Mallick, S. (2021). Does bankruptcy law improve the fate of distressed firms? The role of credit channels. Journal of Corporate Finance 68, 101836.
  15. Bose, U., Mallick, S., and Tsoukas, S. (2020). Does easing access to foreign financing matter for firm performance? Journal of Corporate Finance 64, 101639.
  16. Bräuning, F. and Ivashina, V.(2020). U.S. monetary policy and emerging market credit cycles. Journal of Monetary Economics 112. https://doi.org/10.1016/j.jmoneco.2019.02.005
  17. Caballero, J., Fernández, A., and Park, J. (2019). On corporate borrowing, credit spreads and economic activity in emerging economies: An empirical investigation. Journal of International Economics 118, 160–178.
  18. Caprio, G. (2012). The evidence and impact of financial globalization. Academic Press.
  19. Chari, A., Garcés, F., Martínez, J.F., Valenzuela, P. (2024). Sovereign credit spreads, banking fragility, and global factors. Journal of Financial Stability 101235.
  20. Chong-en Bai, Chang-Tai Hsieh, Zheng Song, 2020. Special Deals with Chinese Characteristics, in: NBER Macroeconomics Annual . NBER, pp. 341–379.
  21. Ciarlone, A., Piselli, P., and Trebeschi, G. (2009). Emerging markets’ spreads and global financial conditions. Journal of International Financial Markets, Institutions and Money 19, 222–239.
  22. Crouzet, N. and Mehrotra, N.R. (2020). Small and large firms over the business cycle. American Economic Review 110, 3549–3601.
  23. De Gregorio, J., and Jara, M. (2024). The boom of corporate debt in emerging markets: Carry trade or save to invest? Journal of International Economics 148, 103844.
  24. di Giovanni, J. and Rogers, J.H. (2023). The impact of US monetary policy on foreign firms. IMF Economic Review 1–58. https://doi.org/10.2139/ssrn.4276946
  25. Doornik, J.A., Hendry, D.F., 2018. PcGiveTM 16 Volume III. London: Timberlake Consultants.
  26. Epstein, B., Shapiro, A.F., and Gómez, A.G. (2019). Global financial risk, aggregate fluctuations, and unemployment dynamics. Journal of International Economics 118, 351–418.
  27. Gal, H., and Juhasz, A. (2025). Quantitative Tightening: Theory, Research, and Impact on Selected Emerging Market Economies. Journal of Central Banking Theory and Practice 14, 163–181.
  28. Georgiadis, G., and Mehl, A. (2016). Financial globalisation and monetary policy effectiveness. Journal of International Economics 103, 200–212.
  29. Gertler, M. and Gilchrist, S. (1994). Monetary policy, business cycles, and the behavior of small manufacturing firms. The Quarterly Journal of Economics 109, 309–340.
  30. Gilchrist, S., Wei, B., Yue, V.Z., and Zakrajšek, E. (2022). Sovereign risk and financial risk. Journal of International Economics 136, 103603.
  31. Gourinchas, P.-O. (2018). Monetary policy transmission in emerging markets: an application to Chile. Series on Central Banking Analysis and Economic Policies no. 25.
  32. Hadlock, C.J. and Pierce, J.R. (2010). New evidence on measuring financial constraints: Moving beyond the KZ index. The Review Financial Studies 23, 1909–1940.
  33. Heger, J., Min, A., and Zagst, R. (2024). Analyzing credit spread changes using explainable artificial intelligence. International Review of Financial Analysis 94, 103315.
  34. Herwadkar, S.S. (2017). Corporate leverage in EMEs: Did the global financial crisis change the determinants? BIS Working Paper March.
  35. Hofmann, B., Shim, I., and Shin, H.S. (2020). Bond risk premia and the exchange rate. Journal of Money, Credit and Banking 52, 497–520.
  36. Hofmann, B., Shim, I., and Shin, H.S. (2016). Sovereign yields and the risk-taking channel of currency appreciation. BIS Working Paper 538
  37. Im, K.S., Pesaran, M.H., and Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics 115, 53–74.
  38. IMF. (2015). Corporate Leverage in Emerging Markets–A Concern? Global Financial Stability Report.
  39. Jiang, B. and Sedik, T.S. (2019). The Turning Tide: How Vulnerable are Asian Corporates? International Monetary Fund.
  40. Jin, L., 2021. Is the credit channel alive? Evidence from firm-level data in Korea. Inha University, Institute of Business and Economic Research.
  41. Kalemli-Ozcan, S., Liu, X., and Shim, I. (2021). Exchange rate fluctuations and firm leverage. IMF Economic Review 69, 90–121.
  42. Kalemli-Özcan, Ṣ. (2019). US monetary policy and international risk spillovers. National Bureau of Economic Research.
  43. Krippner, L. (2015). Zero lower bound term structure modeling: A practitioner’s guide. Springer.
  44. Li, D., Magud, N.E., and Valencia, F. (2020). Financial shocks and corporate investment in emerging markets. Journal of Money, Credit and Banking 52, 613–644.
  45. Miranda-Agrippino, S., Rey, H., 2020. US monetary policy and the global financial cycle. The Review of Economic Studies 87, 2754–2776.
  46. Mulaahmetović, I. (2022). Quantitative easing and macroeconomic performance in the United States. Journal of Central Banking Theory and Practice 11, 79–98.
  47. Okimoto, T. and Takaoka, S. (2024). Sustainability and credit spreads in Japan. International Review of Financial Analysis 91, 103052.
  48. Özatay, F., Özmen, E., and Şahinbeyoğlu, G. (2009). Emerging market sovereign spreads, global financial conditions and US macroeconomic news. Economic Modelling 26, 526–531.
  49. Palazzo, B. and Yamarthy, R. (2022). Credit risk and the transmission of interest rate shocks. Journal of Monetary Economics 130, 120–136.
  50. Rey, H., 2015. Dilemma not trilemma: the global financial cycle and monetary policy independence. National Bureau of Economic Research.
  51. Saunders, A., Spina, A., Steffen, S., and Streitz, D. (2025). Corporate loan spreads and economic activity. The Review of Financial Studies 38(2), 507-546
  52. Saxegaard, E.A., Saxegaard, M.E.C.A., Firat, M., Furceri, D., and Verrier, J. (2022). Us monetary policy shock spillovers: Evidence from firm-level data. International Monetary Fund.
  53. Uribe, M. and Yue, V.Z., (2006). Country spreads and emerging countries: Who drives whom? Journal of International Economics 69, 6–36.
  54. Wang, Congcong, Wang, Chong, Long, H., Zaremba, A., and Zhou, W.(2024). Green bond credit spreads and bank loans in China. International Review of Financial Analysis 94, 103300.
  55. Wang, G. and Shen, Y. (2023). Did quantitative easing reduce the borrowing costs of firms? The risk-taking channel. Accounting and Finance 63. https://doi.org/10.1111/acfi.13059
  56. Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics 126, 25–51.
  57. Wu, J.C. and Xia, F.D. (2016). Measuring the macroeconomic impact of monetary policy at the zero lower bound. Journal of Money, Credit and Banking 48, 253–291.
  58. Yildirim, Z. (2022). Global financial risk, the risk-taking channel, and monetary policy in emerging markets. Economic Modelling 116, 106042.
  59. Yildirim, Z. and Ivrendi, M. (2021). Spillovers of US unconventional monetary policy: quantitative easing, spreads, and international financial markets. Financial Innovation 7, 86.
  60. Zhou, M., Wei, X., Xu, H., and Zhou, Y., (2023). When does a cost shock enhance productivity? Theory and evidence. Economic Modelling https://doi.org/10.1016/j.econmod.2023.106526
Language: English
Page range: 205 - 241
Submitted on: Apr 10, 2025
|
Accepted on: May 19, 2025
|
Published on: Sep 1, 2025
In partnership with: Paradigm Publishing Services
Publication frequency: 3 issues per year

© 2025 Gulsah Kulali, Zekeriya Yildirim, published by Central Bank of Montenegro
This work is licensed under the Creative Commons Attribution 4.0 License.