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Corporate debt maturity in developing countries: Sources of long and short‐termism

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  • Juan J. Cortina
  • Tatiana Didier
  • Sergio L. Schmukler

Abstract

This paper documents to what extent firms from developing countries borrow short versus long term, using data on corporate bond and syndicated loan markets. Contrary to claims in the literature based on firm balance sheets, firms from developing countries borrow through bonds and syndicated loans at maturities similar to those obtained by developed country firms. There are relevant differences across the debt markets composing this aggregate pattern. Firms from developing countries borrow shorter term in domestic bond markets. But the differences in international issuances (accounting for most of the proceeds) are significantly smaller. Moreover, developing country firms borrow longer term in syndicated loan markets. However, only large firms from developing countries (similar in size to those from developed ones) issue bonds and syndicated loans. The short‐termism in developing countries is partly explained by a lower proportion of firms using these markets, with more firms relying on other shorter‐term instruments.

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  • Juan J. Cortina & Tatiana Didier & Sergio L. Schmukler, 2018. "Corporate debt maturity in developing countries: Sources of long and short‐termism," The World Economy, Wiley Blackwell, vol. 41(12), pages 3288-3316, December.
  • Handle: RePEc:bla:worlde:v:41:y:2018:i:12:p:3288-3316
    DOI: 10.1111/twec.12632
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    Cited by:

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    2. Bank for International Settlements, 2019. "Establishing viable capital markets," CGFS Papers, Bank for International Settlements, number 62, december.
    3. Valentina Bruno & Michele H. Dathan & Yuriy Kitsul, 2024. "Corporate Bond Issuance Over Financial Stress Episodes: A Global Perspective," International Finance Discussion Papers 1390, Board of Governors of the Federal Reserve System (U.S.).
    4. Lianet Farfán Pérez & Jorge O. Moreno & Maria de las Mercedes Adamuz, 2022. "Madurez de la deuda corporativa como variable de tiempo: evidencia de las empresas públicas de México," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 17(3), pages 1-34, Julio - S.
    5. Gurara, Daniel & Presbitero, Andrea & Sarmiento, Miguel, 2020. "Borrowing costs and the role of multilateral development banks: Evidence from cross-border syndicated bank lending," Journal of International Money and Finance, Elsevier, vol. 100(C).
    6. Cortina Lorente,Juan Jose & Didier Brandao,Tatiana & Schmukler,Sergio L. & Cortina Lorente,Juan Jose & Didier Brandao,Tatiana & Schmukler,Sergio L., 2016. "Corporate borrowing and debt maturity : the effects of market access and crises," Policy Research Working Paper Series 7815, The World Bank.
    7. Dierk Herzer, 2024. "The impact of domestic R&D and North–South R&D spillovers on energy intensity in developing countries," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-31, April.
    8. Egemen Eren & Semyon Malamud, 2018. "Dominant Currency Debt," Swiss Finance Institute Research Paper Series 18-55, Swiss Finance Institute.
    9. Eren, Egemen & Malamud, Semyon, 2022. "Dominant currency debt," Journal of Financial Economics, Elsevier, vol. 144(2), pages 571-589.
    10. Machokoto, Michael & Areneke, Geofry, 2020. "Does innovation and financial constraints affect the propensity to save in emerging markets?," Research in International Business and Finance, Elsevier, vol. 52(C).
    11. Eduardo Borensztein & Lei Sandy Ye, 2021. "Corporate debt overhang and investment in emerging economies: Firm‐level evidence," International Finance, Wiley Blackwell, vol. 24(1), pages 18-39, April.
    12. Santiago Camara & Maximo Sangiacomo, 2022. "Borrowing Constraints in Emerging Markets," Papers 2211.10864, arXiv.org.

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    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G0 - Financial Economics - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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