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Mr. Serhan Cevik and Fedor Miryugin
The global economy is in the midst of an unprecedented slump caused by the COVID-19 pandemic. To assess the likely evolution of nonfinancial corporate performance going forward, this paper investigates empirically the impact of past pandemics using firm-level data on more than 537,000 companies from 14 developing countries during the period 1998–2018. The analysis indicates that the prevalence of infectious diseases has an economically and statistically significant negative effect on nonfinancial corporate performance. This adverse impact is particularly pronounced on smaller and younger firms, compared to larger and more established corporations. We also find that a higher number of infectious-disease cases in population increases the probability of failure among nonfinancial firms, particularly for small and young firms. In the case of COVID-19, the magnitude of these effects will be much greater, given the unprecedented scale of the outbreak and strict policy responses to contain its spread.
Mr. Serhan Cevik and Fedor Miryugin
Climate change is an existential threat to the global economy and financial markets. There is a large body of literature documenting potential macroeconomic consequences of climate change, but firm-level empirical research on how climate change affects the performance of firms remains scarce. This paper aims to close this gap by empirically investigating the impact of climate change vulnerability on corporate performance using a large panel dataset of more than 3.3 million nonfinancial firms from 24 developing countries over the period 1997–2019. We find that nonfinancial firms operating in countries with greater vulnerability to climate change tend to experience difficulty in access to debt financing even at higher interest rates, while being less productive and profitable relative to firms in countries with lower vulnerability to climate change. We confirm these findings with alternative measures of climate change vulnerability. Furthermore, partitioning the sample reveals that these effects are significantly greater for smaller firms, especially in high-risk sectors and countries and countries with weaker capacity to adapt to and mitigate the consequences of climate change.
Mr. Serhan Cevik and Fedor Miryugin
The global economy is in the midst of an unprecedented slump caused by the coronavirus pandemic. This systemic risk like no other at a time of record-breaking debt levels, especially among nonfinancial firms across the world, could exacerbate corporate vulnerabilities, deepen macro-financial instability, and cause long-lasting damage to economic potential. Using data on more than 2.8 million nonfinancial firms from 52 countries during the period 1997–2018, we develop a two-pronged approach to investigate the relationship between corporate leverage and fixed investment spending. The empirical analysis, robust to a battery of sensitivity checks, confirm corporate leverage is highly vulnerable to disruptions in profitability and cash flow at the firm level and economic growth at the aggregate level. These findings imply that corporate debt overhang could become a strenuous burden on nonfinancial firms, especially if the COVID-19 pandemic lingers and global downturn becomes protracted.
Mr. Serhan Cevik and Fedor Miryugin

allows us to interpret the coefficient on, for example, the leverage ratio as the effect of higher indebtedness relative to a firm’s sector peers at time t . This is an important consideration since some sectors are more highly leveraged than others, with differing investment patterns. The η cs coefficient does the same for country-sector groups. As a result, without sector-country and sector-year fixed effects, the results would only reflect average investment patterns in more leveraged sectors. Finally, η isct is an idiosyncratic error term that satisfies the

Mr. Serhan Cevik and Fedor Miryugin

sample. Furthermore, including sector-year fixed effects allows us to interpret the coefficient on, for example, the leverage ratio as the effect of higher indebtedness relative to a firm’s sector peers at time t . This is an important consideration since some sectors are more highly leveraged than others, with differing investment patterns. The η cs coefficient does the same for country-sector groups. As a result, without sector-country and sector-year fixed effects, the results would only reflect average investment patterns in more leveraged sectors. Finally, ε

Mr. Serhan Cevik and Fedor Miryugin