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Financial Globalization and Debt Maturity in Emerging Economies

Authors: Sergio Schmukler, and Esteban Vesperoni
Pub. Date: August 24, 2003
Full Text: Adobe Acrobat (PDF) [93 KB]

This paper studies how financial globalization affects debt structure in emerging markets. We find that by accessing international markets firms increase their long-term debt and extend their debt maturity. In contrast, long-term debt decreases and the maturity structure shifts to the short term for the average firm after financial liberalization. These effects are stronger in economies with less developed domestic financial systems. The evidence is consistent with segmented markets and with globalization having opposite effects on the firms that are able to integrate with world markets relative to the ones that rely on domestic financing.

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