Addressing the Corporate Debt Overhang
This White Paper considers the problem of corporate debt overhang and discusses the policy tools to address it. Corporate debt overhang describes the scenario in which a company’s debts are so great that they deter new lenders, affect corporate dec...
| Main Author: | |
|---|---|
| Format: | Report |
| Language: | English en_US |
| Published: |
Washington, DC
2022
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099521308302233830/IDU0c2c197da06bf804624090c20b2e2cfdba7eb http://hdl.handle.net/10986/37942 |
| Summary: | This White Paper considers the
problem of corporate debt overhang and discusses the policy
tools to address it. Corporate debt overhang describes the
scenario in which a company’s debts are so great that they
deter new lenders, affect corporate decision-making, and
stifle new investment. At scale, this phenomenon can
compromise economic recovery. A greater level of debt can be
tolerated in a booming economy, where returns on investment
are high, but in a stagnant or contracting economy, where
returns on investment are low, the risks associated with
corporate debt overhang tend to be more severe. The White
Paper is timely and unique in its breadth and perspective.
It presents the different elements of the possible solution
sets to the corporate debt overhang problem, drawing on the
World Bank Group’s unique field experience in designing and
delivering these solutions. The findings in this paper can
be used to help policy makers understand the tools available
to them and, more importantly, which tools are most likely
to deliver the highest marginal benefit for their country. |
|---|