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Corporate Debt: Lessons from Europe for Asia

March 6, 2019

Washington, DC



  • The extensive rise in corporate leverage during the 2000s led to sluggish recovery in Europe in the aftermath of the 2008 crisis, due to a debt overhang effect. In spite of extensive policy interventions in Europe, both in terms of monetary policy and bank regulation aimed at easing the credit supply to firms, investment remains low, since firms are still going through a process of deleveraging.

    Corporate debt is on the rise in Asian countries, with a twist: a significant amount of this debt is in US Dollars. Exchange rate appreciations due to capital inflows into Asian countries will lead firms to take on even more leverage, given the positive net worth shock to balance sheets. There are important lessons from Europe for Asian countries in terms of the detrimental effects of high corporate leverage.

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    Şebnem Kalemli-Özcan

    Neil Moskowitz Endowed Professor of Economics at the University of Maryland, College Park

    Sebnem Kalemli-Özcan is the Neil Moskowitz Endowed Professor of Economics at the University of Maryland, College Park. She is a Research Associate at the National Bureau of Economic Research (NBER) and a Research Fellow at the Center for Economic Policy Research (CEPR). She was the Duisenberg Fellow at the European Central Bank in 2008 and Lead Economist/Adviser for the Middle East and North Africa Region at the World Bank during 2010-11. She has held positions as a Visiting Professor at Bilkent University, Koc University and at Harvard University. She was the Houblon-Norman Fellow of Bank of England and CFR International Affairs Fellow in International Economics based at the Federal Reserve Board and International Monetary Fund for 2017-18. She serves on the editorial board of American Economic Review, Journal of European Economic Association and Journal of International Economics.


    Asli Demirgüç-Kunt

    Chief Economist, Europe and Central Asia, World Bank

    Asli Demirgüç-Kunt is the Chief Economist for the Europe and Central Asia region at the World Bank. Prior to this, Asli was Director of Research in the Development Economics Vice-Presidency. Since joining the Bank in 1989 as a Young Economist, Asli has held several other positions, including Director of Development Policy, Chief Economist of Financial and Private Sector Development Network, and Senior Research Manager, doing research and advising on financial sector and private sector development issues.

  • The ECA Lectures are monthly events chaired by Asli Demirgüç-Kunt, Chief Economist for Europe and Central Asia. The Lecture Series brings distinguished academics, policymakers and other experts to the Bank to discuss issues relevant for the Europe and Central Asia region.

    The series aims to bring cutting edge research and thinking to challenge and contribute to the Bank’s intellectual climate, and reexamine conventional wisdom in current development theories and practices.  Please visit the ECA Chief Economist homepage for more information and details.


  • DATE: 6 March 2019
  • TIME: 12:30pm – 2pm EST
  • LOCATION: MC 13-121, World Bank Main Complex
  • CONTACT: Suzette Dahlia Samms-Lindsay