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|z 9781513597584
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|a 1018-5941
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|a Law, Daniel.
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|a Assessing Default Risks for Chinese Firms :
|b A Lost Cause? /
|c Daniel Law, Shaun Roache.
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|a Washington, D.C. :
|b International Monetary Fund,
|c 2015.
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|a 1 online resource (32 pages)
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|a IMF Working Papers
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|a <strong>Off-Campus Access:</strong> No User ID or Password Required
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|a <strong>On-Campus Access:</strong> No User ID or Password Required
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|a Electronic access restricted to authorized BRAC University faculty, staff and students
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|a Assessing default risks for Chinese firms is hard. Standard measures of risk using market indicators may be unreliable because of implicit guarantees, the large role played by less-informed investors, and other market imperfections. We test this assertion by estimating stand-alone 1-year default probabilities for non-financial firms in China using an equity-based structural model and debt costs. We find evidence that the equity measure of default risk is sensitive to a firm's balance sheet health, profitability, and ownership; specifically, default probabilities are higher for weaker, less profitable, and state-owned firms. In contrast, measures based on the cost of debt seem largely detached from fundamentals and instead determined by implicit guarantees. We conclude that for individual firms, equity-based measures, while far from perfect, provide a better measure of stand-alone default risks than borrowing costs.
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|a Mode of access: Internet
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|a Roache, Shaun.
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|a IMF Working Papers; Working Paper ;
|v No. 2015/140
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| 856 |
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|z Full text available on IMF
|u http://elibrary.imf.org/view/journals/001/2015/140/001.2015.issue-140-en.xml
|z IMF e-Library
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