Determinants of Short-Term Debt

Lusine Lusinyan and Claudia Buch

No 994, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: One key focus of the on-going debate on the integration of international financial markets have been measures to lengthen the maturity of foreign debt. Short-term debt is typically considered to be volatile and thus a potential trigger of currency crises. In contrast to the vivid policy debate on these issues, there is relatively little theoretical and empirical evidence on the determinants of short-term debt. This paper summarizes the theoretical literature on the issue and presents a stylized theoretical model, which focuses on the risks and benefits of short-term debt under conditions of uncertainty. Empirical evidence shows that the level of economic development, the presence of financial centres, and the share of loans to banks have a positive impact on the share of short-term loans. OECD membership, in contrast, has a negative influence.

Keywords: foreign; debt; maturity (search for similar items in EconPapers)
JEL-codes: F21 F23 G21 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:994

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