AS WESTERN countries struggled out of the financial crisis in 2009, they hoped emerging economies in Asia and Latin America could be relied upon to prop up global growth. Instead, emerging countries now hang on what happens in the West. As central banks in Europe and America lowered interest rates and began quantitative easing, investors and banks sent a giant wave of money surging around the world, waiting for the Federal Reserve to raise rates again before it returned.

So long as the receiving market is financially open and deep enough, which many emerging countries now are, that money is otherwise pretty indifferent to the merits of the economies it is parked in, according to a recent IMF paper* by Eugenio Cerutti, Stijn Claessens, and Damien Puy. Brazil, Indonesia, Thailand and Turkey see the ripple effect across equities, bonds and flows to banks. India, by contrast, sees it mainly in stock-markets. But outside Eastern Europe, a monetary "push" in the advanced world generally hits emerging economies as one big wave.

According to the IMF’s Financial Stability Report, released earlier this week, companies have used this relatively judgement-free influx of investment to take on more debt, on more generous terms. Corporate debt in emerging markets has increased five-fold in the decade to 2014, and now stands at $18 trillion, or over 70% of GDP.

Unfortunately, over the last five years those companies have also become less profitable, and so less able to pay it back (see chart). Despite enjoying low yields and the chance to refinance on better terms, 40% still have to pay interest amounting to nearly half their pre-tax earnings. Lending from (newly-regulated) foreign banks may have flattened off. But now they can issue bonds instead. Increasingly these have been in foreign currency (which will make the debt harder to pay off if further outflows cause local currencies to fall further); and the majority has been done by the kinds of companies—oil and gas and construction companies—whose balance sheets and profits are already most risky.

The IMF worries that, if investment in some some emerging markets has been pushed there because of conditions in rich countries, it may be pulled back again too quickly when those change. Businesses that have taken on more debt, but whose prospects are now dimmer, could go bust. If that happens in large numbers, trouble could spread to banks and beyond.

Investors have become restless in recent months. Portfolio investors have already sold $40 billion worth of emerging-market assets in the third quarter of 2015, according to the Institute of International Finance, a trade group. It is the worst quarterly outflow since 2008 (see chart). The IMF suggests that governments get better at monitoring inward financial flows, and impose capital controls if necessary—advice that may be too late.

In fact, it is hard to predict how many firms might struggle. The current levels of corporate debt are not inherently unsustainable, but certainty ends there. Derivatives contracts could offer some protection to firms facing foreign-exchange or interest-rate risks. But they cannot be untangled enough to show who is protected and by how much.

*Eugenio Cerutti, Stijn Claessens, and Damien Puy, "Push Factors and Capital Flows to Emerging markets: Why Knowing Your Lender Matters More Than Fundamentals", IMF Working Paper WP/15/127 (June 2015).