Raising interest rates could spark another financial crisis in emerging economies, the International Monetary Fund (IMF) has warned.

With low interest rates the norm since the last financial crisis in 2008, businesses built up debt piles - because the interest on repayments would be cheap. But the IMF says debt of non-financial firms in emerging markets like China, Brazil, Turkey and Chile has more than quadrupled from $4 trillion (£2.6tn) to $18tn.

As a result, these businesses' debts amount to more than 75% of GDP - it was less than 50% in 2004.

The US Federal Reserve is expected to raise interest rates within the next few months. And analysts full expect a raise by the Fed to spark raises across the world.

The IMF has warned that increasing the cost of borrowing would leave the huge debt piles amassed by those non-financial firms in emerging markets unable to make repayments, and ultimately lead to their demise.

“Shocks to the corporate sector could quickly spill over to the financial sector and generate a vicious cycle as banks curtail lending. Decreased loan supply would then lower aggregate demand and collateral values, further reducing access to finance and thereby economic activity, and in turn, increasing losses to the financial sector,” the IMF said.

It added: “Monetary policy has been exceptionally accommodative across major advanced economies. Firms in emerging markets have faced greater incentives and opportunities to increase leverage as a result of the ensuing unusually favourable global financial conditions."