Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. 'Debt bias' (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a...

The debt market in Thailand has made important strides since the financial crisis of 1997. The Thai government has made significant progress in building an orderly yield curve and is beginning to establish some benchmarks. However, more needs to be done if the government is to achieve its...

This technical note focuses on fixed income markets for Thailand. The note recommends that Thailand should begin an orderly transition from merit-based regulation of corporate issuers and institutional investors to a disclosure-based regulatory system that opens the debt market to a larger and...

Analyses of debt relief that focus on the behavior of debtors and existing creditors understate the incentives for collective action by creditors. It is well known that debt relief could benefit existing creditors by providing incentives for domestic investment by residents of debtor countries....

The correlation bias refers to the fact that claim subordination in the capital structure of the firm influences claim holders’ preferred degree of asset correlation in portfolios held by the firm. Using the copula capital structure model, it is shown that the correlation bias shifts...

This technical note on financing of the private sector for Mexico describes the evolution, composition, and determinants of financing to the nonfinancial private sector in Mexico between 2000 and 2005. Equity issuance has not played an important role in financing the private sector in Mexico...

The adverse impact of the crisis on Luxembourg’s growth outlook is partly mitigated by the authorities’ well-conceived fiscal policy response. The staff report for Luxembourg’s 2009 Article IV Consultation highlights economic developments and policies. It combines...

Mexico’s policy stance has focused on balancing domestic and external conditions, supporting the recovery while rebuilding policy buffers through fiscal consolidation and reserve buildup. Growth has remained resilient during the first half of 2011 and is expected to continue into 2012,...

This staff report on People’s Republic of China 2013 Article IV Consultation highlights macroeconomic developments and outlook. China has maintained robust growth since the global crisis, but the heavy reliance on credit and investment to sustain activity is raising vulnerabilities. The...