Ayyagari, MeghanaDemirgüç-Kunt, AsliMaksimovic, Vojislav2012-03-192012-03-192011-09-01https://hdl.handle.net/10986/3563This paper provides empirical evidence on firm recoveries from financial system collapses in developing countries (systemic sudden stops episodes), and compares them with the experience in the United States in the 2008 financial crisis. Prior research found that economies recover from systemic sudden stop episodes before the financial sector. These recoveries are called Phoenix miracles, and the research questioned the role of the financial system in recovery. Although an average of the macro data across a sample of systemic sudden stop episodes over the 1990s appears consistent with the notion of Phoenix recoveries, closer inspection reveals heterogeneity of responses across the countries, with only a few countries fitting the pattern. Micro data show that across countries, only a small fraction (less than 31 percent) of firms follow a pattern of recovery in sales without a recovery in external credit, and even these firms have access to external sources of cash. The experience of firms in the United States during the 2008 financial crisis also suggests no evidence of credit-less recoveries. An examination of the dynamics of firms' financing, investment and payout policies during recovery periods shows that far from being constrained, the firms in the sample are able to access long-term financing, issue equity, and significantly expand their cash holdings.CC BY 3.0 IGOABSENCE OF CREDITACCESS TO CREDITACCOUNTINGADMINISTRATIVE EXPENSESAMORTIZATIONASSET SALESASSET STRUCTUREBALANCE SHEETBALANCE-SHEETBANK CREDITBANK LENDINGBANKING CRISESBANKRUPTBENCHMARKBOND INDEXBORROWINGSBROKERSCAPITAL FLOWCAPITAL FLOWSCAPITAL MARKETSCAPITAL STOCKCAPITAL STRUCTURECASH BALANCECASH BALANCESCASH DIVIDENDSCASH FLOWCASH FLOWSCASH HOLDINGSCASH OUTFLOWSCHECKSCOMMERCIAL BANKSCOMMERCIAL INCOMECOMMON STOCKCONSUMER LOANSCORPORATE DEBTCORPORATE INVESTMENTCORPORATE PROFITSCREDIT CRUNCHCREDIT CRUNCHESCREDIT LEVELSCREDIT LINESCREDIT MARKETSCRISIS COUNTRYCURRENCYCURRENCY CRISESDEBTDEBT FINANCINGDEBT ISSUANCEDEBT MATURITYDEBT POSITIONSDECISION MAKINGDEPENDENTDEPOSITDEPOSIT MONEY BANKSDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDIVIDENDDIVIDEND PAYMENTSDIVIDENDSDOLLAR DEBTEARNINGSEARNINGS BEFORE INTERESTECONOMIC ACTIVITYECONOMIC OUTLOOKECONOMIC POLICYEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET BONDEMERGING MARKET COUNTRIESEMERGING MARKET FIRMSEMERGING MARKETSEQUIPMENTEQUITY ISSUANCEEQUITY ISSUANCESEQUITY ISSUESEXPENDITUREEXPENDITURESEXTERNAL BORROWINGEXTERNAL CREDITEXTERNAL FINANCEEXTERNAL FINANCINGFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL CONSTRAINTSFINANCIAL CRISESFINANCIAL CRISISFINANCIAL DISTRESSFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL RESOURCESFINANCIAL SECTORFINANCIAL SERVICESFINANCIAL SHOCKFINANCIAL STATEMENTSFINANCIAL STUDIESFINANCIAL SYSTEMFINANCING COSTSFIRM SALESFIXED ASSETSFORECASTSFOREIGN EXCHANGEGDPGDP DEFLATORGLOBAL CAPITALGLOBAL CAPITAL MARKETGROWTH OPPORTUNITIESINCOME STATEMENTINCOME STATEMENTSINDIVIDUAL FIRMINDIVIDUAL FIRMSINDUSTRIAL LOANSINSURANCEINTERNATIONAL BANKINTERNATIONAL FINANCIAL STATISTICSINVENTORIESINVENTORYINVESTINGINVESTMENT CASH FLOW SENSITIVITIESINVESTMENT DECISIONSINVESTMENT OPPORTUNITIESINVESTMENT PATTERNSINVESTMENT-CASH FLOW SENSITIVITIESISSUANCELEVERAGELIMITED ACCESSLIQUIDITYLIQUIDITY CRUNCHLIQUIDITY MANAGEMENTLOCAL CURRENCYLONG TERM FINANCINGLONG-TERM BORROWINGLONG-TERM BORROWINGSLONG-TERM DEBTLONG-TERM DEBT MARKETLONG-TERM DEBT MARKETSLONG-TERM INVESTMENTSMARKET INTEGRATIONMARKET RISKMATURITY MISMATCHMERGERMERGERSMICRO DATANATIONAL INCOMENET CAPITALOUTPUTOVERDRAFTSPOSITIVE COEFFICIENTPRIVATE CREDITPRIVATE SECTOR BANKPRIVATE SECTOR CREDITPRIVATE SECTOR DEVELOPMENTPROFITABILITYPUBLIC POLICYREAL ECONOMIC ACTIVITYREAL ESTATEREAL ESTATE LOANSREAL GDPRECESSIONRECESSIONSRECOVERY PERIODRECOVERY PERIODSRESOLUTION MECHANISMSRETURNRETURNSSALE OF INVESTMENTSSALE OF PROPERTYSAVINGSSECURITIESSELF-FINANCINGSHAREHOLDERSHORT TERM BORROWINGSHORT TERM BORROWINGSSHORT TERM CREDITSHORT-TERM BORROWINGSHORT-TERM DEBTSHORT-TERM DEBTSSHORT-TERM FINANCINGSOURCES OF CREDITSTOCK ISSUANCESTOCK ISSUANCESSTOCK OPTIONSSYSTEMIC BANKING CRISESSYSTEMIC CRISESTERM CREDITTRANSITION ECONOMIESTROUGHVALUE ADDEDWAGESWARRANTSWORKING CAPITALWORLD DEVELOPMENT INDICATORSWorld Bank10.1596/1813-9450-5799