Tighter credit has taken hold to help mitigate high inflation, with the number of financially constrained firms, following the pandemic, now at an all-time high. Insolvency threatens approximately 9% of those constrained companies that are also unable to meet interest expenses. The main risks originate from the corporate choices made when constraints are high: scaling back of more ‘promising’ projects, deferring taxes and opportunistic use of accruals to keep investors happy, which may come back to bite hard. An equity…