Globalization and Firms' Financing Choices: Evidence From Emerging Economies

Author/Editor:

Sergio L. Schmukler ; Esteban Vesperoni

Publication Date:

August 1, 2001

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper studies the relation between firm's financing choices and financial globalization. Using an East Asian and Latin American firm-level panel for the 1980s and 1990s, we study how leverage ratios, debt maturity structure, and sources of financing change when economies are liberalized and when firms access international capital markets. We find that debt-equity ratios do not increase after financial liberalization. Debt maturity shortens for the average firm when countries undertake financial liberalization. However, domestic firms that actually participate in international capital markets extend their debt maturity. Financial liberalization has less effects on firms from countries with more developed domestic financial systems. Leverage ratios increase during crises.

Series:

Working Paper No. 2001/095

Subject:

Financial institutions Financial markets Financial sector development International bonds International capital markets Stock markets Stocks

English

Publication Date:

August 1, 2001

ISBN/ISSN:

9781451851823/1018-5941

Stock No:

WPIEA0952001

Pages:

26

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