Capital Structure in Emerging Asia

Vidhan Goyal and Frank Packer ()
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Frank Packer: Bank for International Settlements, Representative Office for Asia and the Pacific, Hong Kong

No 2017-48, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

Abstract: This paper examines the capital structure and financing decisions of firms in emerging Asia between 1991-2014. Neither the mean/median leverage nor the upper tails of the leverage distribution show any upward shift in recent years. On the whole, corporate leverage appears quite stable. The legal environment and quality of a country's institutions are important influences on corporate leverage decisions: firm characteristics such as asset tangibility and size that help to overcome information asymmetries are less important in countries with stronger institutions. During periods of expansive global monetary policy, firms in countries with stronger institutions raise more debt financing and invest more than other firms.

Pages: 62 pages
Date: 2017-12, Revised 2017-12
New Economics Papers: this item is included in nep-sea
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