Assessing Corporate Vulnerabilities in Indonesia

Assessing Corporate Vulnerabilities in Indonesia

Author: Mr.Jorge A Chan-Lau

Publisher: International Monetary Fund

Published: 2017-04-26

Total Pages: 22

ISBN-13: 1475595131

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Under adverse macroeconomic conditions, the potential realization of corporate sector vulnerabilities could pose major risks to the economy. This paper assesses corporate vulnerabilities in Indonesia by using a Bottom-Up Default Analysis (BuDA) approach, which allows projecting corporate probabilities of default (PDs) under different macroeconomic scenarios. In particular, a protracted recession and the ensuing currency depreciation could erode buffers on corporate balance sheets, pushing up the probabilities of default (PDs) in the corporate sector to the high levels observed during the Global Financial Crisis. While this is a low-probability scenario, the results suggest the need to closely monitor vulnerabilities and strengthen contingency plans.


Book Synopsis Assessing Corporate Vulnerabilities in Indonesia by : Mr.Jorge A Chan-Lau

Download or read book Assessing Corporate Vulnerabilities in Indonesia written by Mr.Jorge A Chan-Lau and published by International Monetary Fund. This book was released on 2017-04-26 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under adverse macroeconomic conditions, the potential realization of corporate sector vulnerabilities could pose major risks to the economy. This paper assesses corporate vulnerabilities in Indonesia by using a Bottom-Up Default Analysis (BuDA) approach, which allows projecting corporate probabilities of default (PDs) under different macroeconomic scenarios. In particular, a protracted recession and the ensuing currency depreciation could erode buffers on corporate balance sheets, pushing up the probabilities of default (PDs) in the corporate sector to the high levels observed during the Global Financial Crisis. While this is a low-probability scenario, the results suggest the need to closely monitor vulnerabilities and strengthen contingency plans.


Assessment of Corporate Sector Value and Vulnerability

Assessment of Corporate Sector Value and Vulnerability

Author: Dale F. Gray

Publisher: World Bank Publications

Published: 1999-01-01

Total Pages: 58

ISBN-13: 9780821346037

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"Once equity has fallen below a certain threshold for a significant period of time, it triggers a suspension of debt payments and distorts incentives for equity holds and managers. But what is a significant period of time? You or I could pay a $10 million annual mortgage payment for a day or two but not two or three months. Similarly, owners and managers can withstand short periods of illiquidity or negative equity but not longer ones. At some point in time, the inability to meet obligations and perception of continued difficulties creates a system-wide breakdown in debt payments." The relationship between the corporate sector and a country's macroeconomy is receiving increased attention from policymakers and investors, especially those affected by the Asian crisis. Recent crises have pointed out the importance of improving our understanding of the links between the corporate sector, the financial sector, and the macroeconomy in a world of volatile capital flows. Assessing the vulnerability of the corporate sector and its links to financial and exchange rate crisis is important for both improved surveillance and in the design of policies in crisis countries. However, the analytical and operational tools available to policymakers and investors to analyze this problem have been limited. This Technical Paper was prepared as part of an initiative to develop new frameworks which can integrate state-of-the art corporate finance principles, macroeconomic, and financial sector analysis. An innovative yet practical framework is provided which has numerous applications for assessing corporate sector vulnerability, design of corporate restructuring strategies, as well as financial sector and macroeconomic policies. It will be of interest to bankers, economic policymakers, corporate finance specialists, and macroeconomists.


Book Synopsis Assessment of Corporate Sector Value and Vulnerability by : Dale F. Gray

Download or read book Assessment of Corporate Sector Value and Vulnerability written by Dale F. Gray and published by World Bank Publications. This book was released on 1999-01-01 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Once equity has fallen below a certain threshold for a significant period of time, it triggers a suspension of debt payments and distorts incentives for equity holds and managers. But what is a significant period of time? You or I could pay a $10 million annual mortgage payment for a day or two but not two or three months. Similarly, owners and managers can withstand short periods of illiquidity or negative equity but not longer ones. At some point in time, the inability to meet obligations and perception of continued difficulties creates a system-wide breakdown in debt payments." The relationship between the corporate sector and a country's macroeconomy is receiving increased attention from policymakers and investors, especially those affected by the Asian crisis. Recent crises have pointed out the importance of improving our understanding of the links between the corporate sector, the financial sector, and the macroeconomy in a world of volatile capital flows. Assessing the vulnerability of the corporate sector and its links to financial and exchange rate crisis is important for both improved surveillance and in the design of policies in crisis countries. However, the analytical and operational tools available to policymakers and investors to analyze this problem have been limited. This Technical Paper was prepared as part of an initiative to develop new frameworks which can integrate state-of-the art corporate finance principles, macroeconomic, and financial sector analysis. An innovative yet practical framework is provided which has numerous applications for assessing corporate sector vulnerability, design of corporate restructuring strategies, as well as financial sector and macroeconomic policies. It will be of interest to bankers, economic policymakers, corporate finance specialists, and macroeconomists.


Guidelines for Analyzing and Managing the Security Vulnerabilities of Fixed Chemical Sites

Guidelines for Analyzing and Managing the Security Vulnerabilities of Fixed Chemical Sites

Author: CCPS (Center for Chemical Process Safety)

Publisher: John Wiley & Sons

Published: 2010-08-13

Total Pages: 242

ISBN-13: 0470924993

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This new initiative demonstrates a process and tools for managing the security vulnerability of sites that produce and handle chemicals, petroleum products, pharmaceuticals, and related materials such as fertilizers and water treatment chemicals. Includes: enterprise screening; site screening; protection analysis; security vulnerability assessment; action planning and tracking.


Book Synopsis Guidelines for Analyzing and Managing the Security Vulnerabilities of Fixed Chemical Sites by : CCPS (Center for Chemical Process Safety)

Download or read book Guidelines for Analyzing and Managing the Security Vulnerabilities of Fixed Chemical Sites written by CCPS (Center for Chemical Process Safety) and published by John Wiley & Sons. This book was released on 2010-08-13 with total page 242 pages. Available in PDF, EPUB and Kindle. Book excerpt: This new initiative demonstrates a process and tools for managing the security vulnerability of sites that produce and handle chemicals, petroleum products, pharmaceuticals, and related materials such as fertilizers and water treatment chemicals. Includes: enterprise screening; site screening; protection analysis; security vulnerability assessment; action planning and tracking.


The Turning Tide: How Vulnerable are Asian Corporates?

The Turning Tide: How Vulnerable are Asian Corporates?

Author: Bo Jiang

Publisher: International Monetary Fund

Published: 2019-05-06

Total Pages: 47

ISBN-13: 1498314023

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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.


Book Synopsis The Turning Tide: How Vulnerable are Asian Corporates? by : Bo Jiang

Download or read book The Turning Tide: How Vulnerable are Asian Corporates? written by Bo Jiang and published by International Monetary Fund. This book was released on 2019-05-06 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.


Global Corporate Stress Tests—Impact of the COVID-19 Pandemic and Policy Responses

Global Corporate Stress Tests—Impact of the COVID-19 Pandemic and Policy Responses

Author: Mr. Thierry Tressel

Publisher: International Monetary Fund

Published: 2021-08-06

Total Pages: 54

ISBN-13: 1513590820

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Corporate sector vulnerabilities have been a central policy topic since the outset of the COVID-19 pandemic. In this paper, we analyze some 17,000 publicly listed firms in a sample of 24 countries, and assess their ability to withstand shocks induced by the pandemic to their liquidity, viability and solvency. For this purpose, we develop novel multi-factor sensitivity analysis and dynamic scenario-based stress test techniques to assess the impact of shocks on firm’s ability to service their debt, and on their liquidity and solvency positions. Applying the October 2020 WEO baseline and adverse scenarios, we find that a large share of publicly-listed firms become vulnerable as a result of the pandemic shock and additional borrowing needs to overcome cash shortfalls are large, while firm behavioral responses and policies substantially help overcome the impact of the shock in the near term. Looking forward, while interest coverage ratios tend to improve over time after the initial shock as earnings recover in line with projected macroeconomic conditions, liquidity needs remain substantial in many firms across countries and across industries, while insolvencies rise over time in specific industries. To inform policy debates, we offer an approach to a triage between viable and unviable firms, and find that the needs for liquidity support of viable firms remain important beyond 2020, and that medium-term debt restructuring needs and liquidations of firms may be substantial in the medium-term.


Book Synopsis Global Corporate Stress Tests—Impact of the COVID-19 Pandemic and Policy Responses by : Mr. Thierry Tressel

Download or read book Global Corporate Stress Tests—Impact of the COVID-19 Pandemic and Policy Responses written by Mr. Thierry Tressel and published by International Monetary Fund. This book was released on 2021-08-06 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate sector vulnerabilities have been a central policy topic since the outset of the COVID-19 pandemic. In this paper, we analyze some 17,000 publicly listed firms in a sample of 24 countries, and assess their ability to withstand shocks induced by the pandemic to their liquidity, viability and solvency. For this purpose, we develop novel multi-factor sensitivity analysis and dynamic scenario-based stress test techniques to assess the impact of shocks on firm’s ability to service their debt, and on their liquidity and solvency positions. Applying the October 2020 WEO baseline and adverse scenarios, we find that a large share of publicly-listed firms become vulnerable as a result of the pandemic shock and additional borrowing needs to overcome cash shortfalls are large, while firm behavioral responses and policies substantially help overcome the impact of the shock in the near term. Looking forward, while interest coverage ratios tend to improve over time after the initial shock as earnings recover in line with projected macroeconomic conditions, liquidity needs remain substantial in many firms across countries and across industries, while insolvencies rise over time in specific industries. To inform policy debates, we offer an approach to a triage between viable and unviable firms, and find that the needs for liquidity support of viable firms remain important beyond 2020, and that medium-term debt restructuring needs and liquidations of firms may be substantial in the medium-term.


Indonesia

Indonesia

Author: International Monetary Fund. Asia and Pacific Dept

Publisher: International Monetary Fund

Published: 2016-03-15

Total Pages: 55

ISBN-13: 1513585142

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This paper focuses on the selected issues of the Indonesian economy: (1) banking sector condition in India, (2) corporate vulnerabilities, (3) analysis of macrofinancial linkages in Indonesia, and (4) infrastructure development in Indonesia. Overall, the banking sector appears well capitalized and profitable. However, rising vulnerabilities from corporate foreign currency leverage and challenging financial market conditions have raised concerns. The risk from the corporate sector remains manageable, and the authorities have strengthened the monitoring framework. Macrofinancial linkages are analyzed using two complementary approaches: sector-level balance sheet analysis and a panel vector autoregressive approach. This paper addresses macrofiscal issues surrounding infrastructure development in Indonesia.


Book Synopsis Indonesia by : International Monetary Fund. Asia and Pacific Dept

Download or read book Indonesia written by International Monetary Fund. Asia and Pacific Dept and published by International Monetary Fund. This book was released on 2016-03-15 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the selected issues of the Indonesian economy: (1) banking sector condition in India, (2) corporate vulnerabilities, (3) analysis of macrofinancial linkages in Indonesia, and (4) infrastructure development in Indonesia. Overall, the banking sector appears well capitalized and profitable. However, rising vulnerabilities from corporate foreign currency leverage and challenging financial market conditions have raised concerns. The risk from the corporate sector remains manageable, and the authorities have strengthened the monitoring framework. Macrofinancial linkages are analyzed using two complementary approaches: sector-level balance sheet analysis and a panel vector autoregressive approach. This paper addresses macrofiscal issues surrounding infrastructure development in Indonesia.


Indonesia

Indonesia

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2010-09-16

Total Pages: 111

ISBN-13: 1455209678

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Indonesia recovered quickly after being hit hard by contagion from the global financial crisis. Banking fundamentals have improved, with most Indonesian banks reporting high capital, comfortable levels of liquidity, and solid profitability. Banks exhibit rising credit exposures to retail and SMEs. The Crisis Management Protocol functioned well during the crisis, but it has lapsed. A viable capital market will diversify the sources of funding and provide long-term investment opportunities. The small insurance industry should be restructured and gradually expanded to broaden the institutional investor base.


Book Synopsis Indonesia by : International Monetary Fund

Download or read book Indonesia written by International Monetary Fund and published by International Monetary Fund. This book was released on 2010-09-16 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt: Indonesia recovered quickly after being hit hard by contagion from the global financial crisis. Banking fundamentals have improved, with most Indonesian banks reporting high capital, comfortable levels of liquidity, and solid profitability. Banks exhibit rising credit exposures to retail and SMEs. The Crisis Management Protocol functioned well during the crisis, but it has lapsed. A viable capital market will diversify the sources of funding and provide long-term investment opportunities. The small insurance industry should be restructured and gradually expanded to broaden the institutional investor base.


Disaster Risk Reduction in Indonesia

Disaster Risk Reduction in Indonesia

Author: Riyanti Djalante

Publisher: Springer

Published: 2017-05-02

Total Pages: 668

ISBN-13: 3319544667

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This book is a unique, transdisciplinary summary of the state of the art of disaster risk reduction (DRR) in Indonesia. It provides a comprehensive overview of disaster risk governance across all levels and multiple actors including diverse perspectives from practitioners and researchers on the challenges and progress of DRR in Indonesia. The book includes novel and emerging topics such as the role of culture, religion, psychology and the media in DRR. It is essential reading for students, researchers, and policy makers seeking to understand the nature and variety of environmental hazards and risk patterns affecting Indonesia. Following the introduction, the book has four main parts of key discussions. Part I presents disaster risk governance from national to local level and its integration into development sectors, Part II focuses on the roles of different actors for DRR, Part III discusses emerging issues in DRR research and practice, and Part IV puts forward variety of methods and studies to measure hazards, risks and community resilience.


Book Synopsis Disaster Risk Reduction in Indonesia by : Riyanti Djalante

Download or read book Disaster Risk Reduction in Indonesia written by Riyanti Djalante and published by Springer. This book was released on 2017-05-02 with total page 668 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a unique, transdisciplinary summary of the state of the art of disaster risk reduction (DRR) in Indonesia. It provides a comprehensive overview of disaster risk governance across all levels and multiple actors including diverse perspectives from practitioners and researchers on the challenges and progress of DRR in Indonesia. The book includes novel and emerging topics such as the role of culture, religion, psychology and the media in DRR. It is essential reading for students, researchers, and policy makers seeking to understand the nature and variety of environmental hazards and risk patterns affecting Indonesia. Following the introduction, the book has four main parts of key discussions. Part I presents disaster risk governance from national to local level and its integration into development sectors, Part II focuses on the roles of different actors for DRR, Part III discusses emerging issues in DRR research and practice, and Part IV puts forward variety of methods and studies to measure hazards, risks and community resilience.


Realizing Indonesia's Economic Potential

Realizing Indonesia's Economic Potential

Author: Mr.Luis E Breuer

Publisher: International Monetary Fund

Published: 2018-08-01

Total Pages: 336

ISBN-13: 1484355903

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Analytical work on Indonesian macroeconomic and financial issues, with an overarching theme on building institutions and policies for prosperity and inclusive growth. The book begins with a 20-year economic overview by former Finance Minister Chatib Basri, with subsequent chapters covering diverse sectors of the economy as well as Indonesia’s place in the global economy.


Book Synopsis Realizing Indonesia's Economic Potential by : Mr.Luis E Breuer

Download or read book Realizing Indonesia's Economic Potential written by Mr.Luis E Breuer and published by International Monetary Fund. This book was released on 2018-08-01 with total page 336 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analytical work on Indonesian macroeconomic and financial issues, with an overarching theme on building institutions and policies for prosperity and inclusive growth. The book begins with a 20-year economic overview by former Finance Minister Chatib Basri, with subsequent chapters covering diverse sectors of the economy as well as Indonesia’s place in the global economy.


A review of existing approaches and methods to assess climate change vulnerability of forests and forest-dependent people

A review of existing approaches and methods to assess climate change vulnerability of forests and forest-dependent people

Author: Food and Agriculture Organization of the United Nations

Publisher: Food & Agriculture Org.

Published: 2018-11-29

Total Pages: 84

ISBN-13: 9251311382

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Until recently, considerably more attention was paid to using forests to mitigate climate change, through the absorption of carbon dioxide (CO2) from the atmosphere, than there was on considering the need to adapt forests to avoid the worst effects that climate change could have on them. The switch from a mitigation-heavy approach to one that considers adaptation in a more balanced manner underscores the need to have approaches to assess the vulnerability of forests to climate change. One reason for this more balanced focus may be due to the realization by the broader public, governmental organizations and the forest science community that the climate change that has already occurred is permanent in human terms, because it takes centuries for much of the CO2 emitted from fossil fuel sources to be removed from the atmosphere. There are already substantial impacts that are being seen in the world’s forests. These impacts are certain to continue increasing until CO2 emissions drop to lower levels. For that reason, adaptation of the world’s forests requires attention. The approaches to assessing vulnerability can be categorized according to the focus they each provide. Contextual vulnerability addresses current issues of climate and is usually evaluated using participatory techniques with people who live in, or work with, forests. Outcome vulnerability looks at the biophysical vulnerability of forests; it is often used to assess the cause-and-effect of climate change on a biological system. Vulnerability assessments can be highly technical and quantitative, using advanced computer programs and geographic information systems, or they can be based on social science approaches to obtaining qualitative information from people.


Book Synopsis A review of existing approaches and methods to assess climate change vulnerability of forests and forest-dependent people by : Food and Agriculture Organization of the United Nations

Download or read book A review of existing approaches and methods to assess climate change vulnerability of forests and forest-dependent people written by Food and Agriculture Organization of the United Nations and published by Food & Agriculture Org.. This book was released on 2018-11-29 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: Until recently, considerably more attention was paid to using forests to mitigate climate change, through the absorption of carbon dioxide (CO2) from the atmosphere, than there was on considering the need to adapt forests to avoid the worst effects that climate change could have on them. The switch from a mitigation-heavy approach to one that considers adaptation in a more balanced manner underscores the need to have approaches to assess the vulnerability of forests to climate change. One reason for this more balanced focus may be due to the realization by the broader public, governmental organizations and the forest science community that the climate change that has already occurred is permanent in human terms, because it takes centuries for much of the CO2 emitted from fossil fuel sources to be removed from the atmosphere. There are already substantial impacts that are being seen in the world’s forests. These impacts are certain to continue increasing until CO2 emissions drop to lower levels. For that reason, adaptation of the world’s forests requires attention. The approaches to assessing vulnerability can be categorized according to the focus they each provide. Contextual vulnerability addresses current issues of climate and is usually evaluated using participatory techniques with people who live in, or work with, forests. Outcome vulnerability looks at the biophysical vulnerability of forests; it is often used to assess the cause-and-effect of climate change on a biological system. Vulnerability assessments can be highly technical and quantitative, using advanced computer programs and geographic information systems, or they can be based on social science approaches to obtaining qualitative information from people.