02071cas a2200253 a 4500 AALejournalIMF019188 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498311502 1018-5941 BD-DhAAL BD-DhAAL Jiang, Bo. The Turning Tide : How Vulnerable are Asian Corporates? / Bo Jiang, Tahsin Saadi Sedik. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (47 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Using a new firm-level dataset with comprehensive information on Asian firms' FX liabilities, we show that Asia's nonfinancial corporate sector is vulnerable to a tightening of global financial conditions. Higher global interest rates and exchange rate depreciation increase the probability of default of Asian firms. A 30 percent currency depreciation is associated with a two-notch downgrade in the corporate credit rating (e.g., from A to BBB+), resulting in 7 percent of Asian firms falling into bankruptcy. But the impact is nonlinear-as the firms' FX liability increases, the balance sheet channel of exchange rate offsets, then dominates, the competitiveness channel. The balance sheet channel offsets the competitiveness channel when the share of U.S. dollar debt is between 10 and 20 percent. We also find that currency depreciation increases firm-level investment on average, but for firms with the share of FX liabilities above 20 percent, investment contracts with depreciation. Mode of access: Internet Saadi Sedik, Tahsin. IMF Working Papers; Working Paper ; No. 2019/093 Full text available on IMF http://elibrary.imf.org/view/journals/001/2019/093/001.2019.issue-093-en.xml IMF e-Library