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Globalization and Firms' Financing Choices; Evidence From Emerging Economies

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  • Sergio L. Schmukler
  • Esteban Vesperoni

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.

Suggested Citation

  • Sergio L. Schmukler & Esteban Vesperoni, 2001. "Globalization and Firms' Financing Choices; Evidence From Emerging Economies," IMF Working Papers 01/95, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:01/95
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    Cited by:

    1. Claessens, Stijn & Kingebiel, Daniela & Schmukler, Sergio L., 2002. "Explaining the Migration of Stocks from Exchanges in Emerging Economies to International Centres," WIDER Working Paper Series 094, World Institute for Development Economic Research (UNU-WIDER).
    2. Kristin J. Forbes, 2007. "The Microeconomic Evidence on Capital Controls: No Free Lunch," NBER Chapters,in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 171-202 National Bureau of Economic Research, Inc.
    3. Federico Guerrero, 2006. "Early-Stage Globalization and Corporate Debt Maturity: The Case of South Korea, 1980-94," Working Papers 06-016, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics.
    4. Augusto de la Torre & Sergio Schmukler, 2007. "Emerging Capital Markets and Globalization: The Latin American Experience," IDB Publications (Books), Inter-American Development Bank, number 349, June.
    5. Lizarazo, Sandra Valentina, 2013. "Default risk and risk averse international investors," Journal of International Economics, Elsevier, vol. 89(2), pages 317-330.
    6. Radovan Vadovic, 2009. "Early, Late, and Multiple Bidding in Internet Auctions," Working Papers 0904, Centro de Investigacion Economica, ITAM.
    7. Federico Guerrero & Elliott Parker, 2006. "Financial Liberalization and Corporate Debt Maturity in Thailand, 1993-97," Working Papers 06-001, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics.
    8. Augusto de la Torre & Sergio L. Schmukler, 2007. "Emerging Capital Markets and Globalization : The Latin American Experience," World Bank Publications, The World Bank, number 7187, September.
    9. Singh, Bhupal, 2007. "Corporate choice for overseas borrowings: The Indian evidence," MPRA Paper 13220, University Library of Munich, Germany.

    More about this item

    Keywords

    Financial integration; Capital markets; Globalization; International finance; financing choices; financial structure; financial globalization; international financial markets; financial liberalization; international capital markets; access to international capital; international capital; General Financial Markets; Corporate Finance And Governance;

    JEL classification:

    • F1 - International Economics - - Trade
    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

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