Globalization and Firms' Financing Choices : Evidence from Emerging Economies
The authors investigate whether integration with global markets affects the financing choices of firms from East Asia and Latin America. Using firm-level data for the 1980s and 1990s, they study how leverage ratios, the structure of debt maturity,...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/04/437751/globalization-firms-financing-choices-evidence-emerging-economies http://hdl.handle.net/10986/22188 |
| Summary: | The authors investigate whether
integration with global markets affects the financing
choices of firms from East Asia and Latin America. Using
firm-level data for the 1980s and 1990s, they study how
leverage ratios, the structure of debt maturity, and sources
of financing change when economies are liberalized and when
firms gain access to international equity and bond markets.
The evidence shows that integration with world financial
markets has uneven effects. On the one hand, debt maturity
for the average firm shortens when countries undertake
financial liberalization. On the other hand, domestic firms
that actually participate in international markets, get
better financing opportunities, and extend their debt
maturity. Moreover, firms in economies with deeper domestic
financial systems are affected less by financial
liberalization. Finally, they show that leverage ratios
increase during times of crisis. In an appendix, they
analyze the previously unstudied case of Argentina, which
experienced sharp financial liberalization, and was hit hard
by all recent global crises. |
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