Narrow Your Choices

Refine By Topic

Refine By Series

Refine By Language

Refine By Date

—

Refine By IMF Taxonomy

Refine By JEL Taxonomy

Refine by LOC Taxonomy

Refine By THEMA Taxonomy

  • Print
  • Save

Asia and Pacific > India

You are looking at 1 - 10 of 17 items for :

  • Type: Journal Issue x
  • Corporate Finance and Governance: General x
Clear All Modify Search
Cover IMF Working Papers
Mitigating Climate Change at the Firm Level: Mind the Laggards
Damien Capelle
,
Divya Kirti
,
Nicola Pierri
, and
German Villegas Bauer
Using self-reported data on emissions for a global sample of 4,000 large, listed firms, we document large heterogeneity in environmental performance within the same industry and country. Laggards—firms with high emissions relative to the scale of their operations—are larger, operate older physical capital stocks, are less knowledge intensive and productive, and adopt worse management practices. To rationalize these findings, we build a novel general equilibrium heterogeneous-firm model in which firms choose capital vintages and R&D expenditure and hence emissions. The model matches the full empirical distribution of firm-level heterogeneity among other moments. Our counter-factual analysis shows that this heterogeneity matters for assessing the macroeconomic costs of mitigation policies, the channels through which policies act, and their distributional effects. We also quantify the gains from technology transfers to EMDEs.
Keywords:
Climate Change; Productivity; Technology Adoption; Capital Vintages; Emissions; R&D expenditure; capital vintage; management practice; emission intensity; emission Intensity; Carbon tax; Greenhouse gas emissions; Consumption; Stocks; Global
Cover Regional Economic Outlook: Asia and Pacific, May 2023
Regional Economic Outlook: Asia and Pacific, May 2023
Recovery Unabated amid Uncertainty
International Monetary Fund. Asia and Pacific Dept

Abstract

Long Summary (1,000 characters)  Growth in Asia and the Pacific is projected to increase this year to 4.6 percent, up from 3.8 percent in 2022, an upgrade of 0.3 percent from the October 2022 World Economic Outlook. This means the region would contribute over 70 percent to global growth. Asia’s dynamism will be driven primarily by the recovery in China and resilient growth in India, while growth in the rest of Asia is expected to bottom out in 2023, in line with other regions. However, this dynamic outlook does not imply that policymakers in the region can afford to be complacent. The pressures from diminished global demand will weigh on the outlook. Headline inflation has been easing, but remains above targets in most countries, while core inflation has proven to be sticky. Although spillovers from turmoil in the European and US banking sectors have been limited thus far, vulnerabilities to global financial tightening and volatile market conditions, especially in the corporate and household sectors, remain elevated. Growth is expected to fall to 3.9 percent five years out, the lowest medium-term forecast in recent history, thus contributing to one of the lowest medium-term global growth forecasts since 1990.

Keywords:
Asia and the Pacific; regional outlook; economic growth; inflation; banking sectors; financial tightening; household sector; corporate sector; China; electric vehicles; COVID-19; Russia’s war in Ukraine
Cover IMF Working Papers
Corporate Sector Resilience in India in the Wake of the COVID-19 Shock
Lucyna Gornicka
,
Ms. Sumiko Ogawa
, and
Ms. TengTeng Xu
To assess the resilience of India’s corporate sector against COVID-19-related shocks, we conducted a series of stress tests using firm-level corporate balance sheet data. The results reveal a differential impact across sectors, with the most severe impact on contact-intensive services, construction, and manufacturing sectors, and micro, small, and medium enterprises. On policy impact, the results highlight that temporary policy measures have been particularly effective in supporting firm liquidity, but the impact on solvency is less pronounced. On financial sector balance sheets, we found that public sector banks are more vulnerable to stress in the corporate sector, partly due to their weaker starting capital positions. When considering forward-looking multiperiod growth scenarios, we find that the overall corporate performance will depend on the speed of recovery. A slower pace of recovery could lead to persistently high levels of debt at risk, especially in some services and industrial sectors.
Keywords:
balance sheet data; micro firm; firm liquidity; firm's equity; firm's ability; manufacturing firm; Stress testing; Corporate sector; COVID-19; Financial statements; Solvency stress testing; Global
Cover IMF Working Papers
Real Exchange Rates, Economic Complexity, and Investment
Steve Brito
,
Mr. Nicolas E Magud
, and
Mr. Sebastian Sosa
We show that the response of firm-level investment to real exchange rate movements varies depending on the production structure of the economy. Firms in advanced economies and in emerging Asia increase investment when the domestic currency weakens, in line with the traditional Mundell-Fleming model. However, in other emerging market and developing economies, as well as some advanced economies with a low degree of structural economic complexity, corporate investment increases when the domestic currency strengthens. This result is consistent with Diaz Alejandro (1963)—in economies where capital goods are mostly imported, a stronger real exchange rate reduces investment costs for domestic firms.
Keywords:
WP; capital goods; emerging market; Firm-level investment; real exchange rate; misalignment; profit function; panel regression; dividend flow; interest bill; firm level; Real exchange rates; Real effective exchange rates; Currencies; Emerging and frontier financial markets; Corporate investment; Asia and Pacific
Cover IMF Working Papers
Taxation and the Peer-to-Peer Economy
Aqib Aslam
and
Ms. Alpa Shah
The growth of the peer-to-peer (P2P) economy over the last decade has captivated both stock markets and policymakers alike. While the means for transacting might be different to existing firm structures—with the emergence of digital platforms that connect individual buyers and sellers directly—the tax behavior of individuals operating in this new economy are very familiar. What is clear is that while the P2P economy has potentially exacerbated existing policy, administrative, and revenue-mobilization challenges associated with small business taxation—such as the choice of the tax base and how to set tax thresholds—, the technology behind P2P platforms presents a valuable opportunity to eventually solve them.
Keywords:
WP; tax treatment; value-added tax; gross income; flat rate; goods and services tax; Digital platforms; direct tax; indirect tax; peer-to-peer markets; tax compliance; transaction costs; tax liability; Sharing economy; Personal income; Small and medium enterprises; Income tax systems; Income and capital gains taxes; Global
Cover IMF Working Papers
Corporate Investment in Emerging Markets: Financing vs. Real Options Channel
Delong Li
,
Mr. Nicolas E Magud
, and
Mr. Fabian Valencia
We examine how firm and country heterogeneity shape the response of corporate investment in emerging markets to changes in global interest rates and volatility. We test for the presence of (i) a financing channel originating from changes in the costs of external borrowing and (ii) a real options channel—reflecting firms’ option values to delay investment. We find evidence of the coexistence of both channels. Financially weaker firms reduce investment by more in response to higher interest rates or volatility, while firms with stronger balance sheets become less willing to invest after volatility spikes. Furthermore, the intensity of the financing channel diminishes for firms in countries with lower public debt, higher foreign reserves, or deeper financial markets.
Keywords:
WP; net leverage; investment schedule; standard deviation; Investment; financial frictions; real options; uncertainty shocks; interest rate shock; financing channel; cash flow ratio; Currencies; Corporate investment; Liquidity management; Emerging and frontier financial markets; Global
Cover IMF Working Papers
Corporate Vulnerabilities in India and Banks' Loan Performance
Peter Lindner
and
Sung Eun Jung
The financial performance of India's corporate sector has been under pressure since the Global Financial Crisis. Balance-sheet data on a large cross-section of Indian non-financial corporates show that the growth in their leverage over the last 15 years has been associated with a notable increase in the vulnerabilities of firms carrying high interest payment burdens. Gauged by the debt carried by the most vulnerable component of firms, the Indian corporate sector’s vulnerability to severe systemic shocks has increased to levels not seen since 2001. Progress on the macroeconomic front, together with improved credit appraisals and stricter impairment standards on the bank side, will be critical to help India's banks resume their role as economic growth drivers.
Keywords:
WP; Gross NPAs; bank; bank asset quality deterioration; India; IMF staff calculation; Financial crisis; firm resilience; bank-corporate dependencies; leverage; corporate performance; primary market equity issuance; return on equity; recapitalization cost; worsening performance; Commercial banks; State-owned banks; Public sector; Loans; Bank credit; Global
Cover IMF Working Papers
Disentangling India’s Investment Slowdown
Rahul Anand
and
Mr. Volodymyr Tulin
This paper documents the recent slowdown in investment in India and explores its underlying causes. The sharp investment deceleration has sparked an intense debate about the role of interest rates, as well as business confidence and economic policy uncertainty. Our results suggest that while explaining aggregate investment activity better than nominal interest rates, real interest rates account for only one quarter of the explained investment downturn. In addition, standard macro-financial variables do not fully explain the recent investment slump. Using a new measure of economic policy uncertainty, the results suggest that heightened uncertainty and deteriorating business confidence have played a key role in the recent investment slowdown.
Keywords:
WP; investment; real interest rate; nominal interest rate; prime lending rate; investment slowdown; Investments; India; Policy Uncertainty; inflation expectation; investment activity; investment project; investment outlook; activity growth; Real interest rates; Inflation; Gross fixed investment; Prime rates; Corporate investment; Global
Cover IMF Working Papers
Does the Business Environment Affect Corporate Investment in India?
Kiichi Tokuoka
Since the global financial crisis, corporate investment has been weak in India. Sluggish corporate investment would not only moderate growth from the demand side but also constrain growth from the supply side over time. Against this background, this paper analyzes the reasons for the slowdown and discusses how India can boost corporate investment, using both macro and firm-level micro data. Analysis of macro data indicates that macroeconomic factors can largely explain corporate investment but that they do not appear to account fully for recent weak performance, suggesting a key role of the business environment in reviving corporate investment. Analysis of micro panel data suggests that improving the business environment by reducing costs of doing business, improving financial access, and developing infrastructure, could stimulate corporate investment.
Keywords:
WP; firm; panel data; real GDP; Corporate investment; Business environment; Costs of doing business; Infrastructure; corporate investment; investment function; business cost; investment in India; firm size dummy; Gross fixed investment; Real interest rates; Global
Cover IMF Working Papers
Sources of Corporate Profits in India: Business Dynamism or Advantages of Entrenchment?
Michael Walton
,
Anusha Nath
, and
Mr. Ashoka Mody
Some see India’s corporate sector as the fundamental driver of recent and future prosperity. Others see it as a source of excessive market power, personal enrichment, and influence over the State, with an ultimately distorting influence. To inform this debate, this paper analyses the correlates of profitability of firms listed on the Bombay Stock Exchange, covering a dynamic period-in terms of firm entry and growth-from the early 1990s to the late 2000s. Overall, the results do not provide support for the systematic exercise of market power via the product market. At least for this period, the story is more consistent with a competitive and dynamic business sector, despite the continued dominance of business houses and public sector firms in terms of sales and assets. Those with opposing views can, with justification, argue that our analysis does not cover influences, such as corporate governance and state-corporate relations, which may paint a less flattering picture of the corporate sector’s role. Those broader themes deserve further attention.
Keywords:
WP; business house; profit rate; BSE firm; sales growth; market power; Corporate sector; India; profitability; growth; firm growth; Housing; Business enterprises; Competition; Global