Globalization and Firms' Financing Choices: Evidence From Emerging Economies
August 1, 2001
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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.
Subject: Financial institutions, Financial markets, Financial sector development, International bonds, International capital markets, Stock markets, Stocks
Keywords: debt-equity ratio, debt-equity variable, East Asia, financial globalization, financial integration, financial liberalization, Financial sector development, financial structure, financing choices, International bonds, International capital markets, international financial markets, liberalization policy, maturity structure, Stock markets, Stocks, WP
Pages:
26
Volume:
2001
DOI:
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Issue:
095
Series:
Working Paper No. 2001/095
Stock No:
WPIEA0952001
ISBN:
9781451851823
ISSN:
1018-5941
