Globalization and Firms' Financing Choices: Evidence From Emerging Economies

By Sergio L. Schmukler, Esteban Vesperoni

August 1, 2001

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Sergio L. Schmukler, and Esteban Vesperoni. Globalization and Firms' Financing Choices: Evidence From Emerging Economies, (USA: International Monetary Fund, 2001) accessed November 21, 2024

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.

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

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/095
Stock No:

WPIEA0952001
ISBN:

9781451851823
ISSN:

1018-5941

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