From Debt Reset to Growth Onset? Sovereign Debt Restructuring and Firm Performance in Developing Countries

Organized by the Private Sector Development Research Network

Hosted by IFC

Friday, 9th Jan 2025 from 9-10am EST

ABOUT THE SEMINAR

Leveraging a unique dataset that combines country-level information on debt restructuring with firm-level data from the World Bank Enterprise Surveys (WBES) spanning from 2004 to 2023, we analyze the effects of debt restructuring on firm sales growth. Using recent advancements in difference-in-differences estimation to account for the staggered implementation of restructurings, we find that sovereign debt restructuring increases firm performance by 5–9 percentage points, with stronger effects for private, domestically-owned firms and those reliant on public and financial services. The impact varies by debt type (domestic or external), creditor composition, and implementation speed. Swift external restructurings led by official creditors, such as the Paris Club, yield the most substantial positive effects, whereas other types of restructurings show no significant impact on private sector growth.

ABOUT THE SPEAKER

Marin Ferry (Université Gustave Eiffel)

Assistant Professor

Marin Ferry is an assistant professor at UGE (ERUDITE), a associate research fellow at the Institute for Research and Development (IRD), and a consultant at Banque de France. His research interests span Financing for Development, Sovereign Debt, Political Economy, and Environmental Policies in Developing Countries. His resent work includes research on climate vulnerability, the impact of debt relief on educational outcomes, Taxation, Infrastructure, and Firm Performance in Developing Countries, and low income countries’ debt relief programs.

Details of Dr. Ferry’s work can be found here.