Globalization and Firms' Financing Choices: Evidence From Emerging Economies

Sergio Schmukler and Esteban Vesperoni

No 2001/095, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; maturity structure; debt-equity variable; financial liberalization; debt-equity ratio; liberalization policy; financing choices; financial structure; financial integration; financial globalization; international financial markets; International capital markets; Stock markets; Stocks; Financial sector development; International bonds; East Asia (search for similar items in EconPapers)
Pages: 26
Date: 2001-08-01
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Globalization and Firms' Financing Choices: Evidence from Emerging Economies (2001)
Working Paper: Globalization and firms'financing choices - evidence from emerging economies (2000)
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