Why Recovery from a Financial Crisis Can Be Slow

June 27th, 2013
in econ_news, syndication

Econintersect: A study in the Philly Fed Business Review claims one reason for the slow recovery from the Great Recession is business debt overhang.

Recovery from financial crises tends to be slow, and one reason for this is the debt overhang problem. The declines in asset values that accompany a financial crisis lower firms’ net worth. If these firms are carrying debt, the loss of net worth brings them closer to default.

Follow up:

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Debt Overhang: Why Recovery from a Financial Crisis Can Be Slow



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